Crypto news

The July Consumer Price Index (CPI) in the US came in at exactly 3.4% year-over-year, fully matching the Wall Street consensus forecast. Core CPI, which excludes volatile food and energy categories, slowed to 2.5%. These figures do not provide the market with a clear signal: the odds of a Federal Reserve (Fed) rate hike in September remain at a coin-flip level, creating an extremely tense atmosphere for bitcoin (BTC) traders.

Fresh data from the Bureau of Labor Statistics showed a monthly price increase of 0.1%, marking a reversal after June's 0.4% decline — the most significant drop since April 2020, driven primarily by cheaper energy. On an annual basis, inflation slowed from 3.5% to 3.4%, while the core indicator fell from 2.6% to 2.5%, also meeting analyst expectations.

Rates Market: 50/50

The CME FedWatch tool shows nearly perfect parity: the probability of holding rates at the September meeting stands at 54.1%, while the odds of a 25-basis-point hike are estimated at 45.9%. A week earlier, futures priced in a higher likelihood of tightening at 54.4%. This shift occurred against the backdrop of a weak July jobs report, when the number of new jobs fell by 23,000 against forecasts of 80,000 growth.

Fed Chair Kevin Warsh has held the target rate in the 3.50–3.75% range since May, resisting pressure from President Donald Trump to lower borrowing costs. At the July meeting, three committee members voted for a hike, and this hawkish signal found support among debt market participants. July's data did not settle the debate between "doves" and "hawks": the former found no reasons to demand easing, while the latter saw no alarming signals for tightening.

Bitcoin: Cautious Optimism Amid Uncertainty

Bitcoin's reaction was subdued: following the report's release, the leading cryptocurrency traded around $64,039, down 0.2% over the day. The market perceived the data as neutral — neither adding risks of accelerating inflation nor grounds for policy easing.

However, derivatives paint a more complex picture. Andrey Grachev, Managing Partner at DWF Labs, notes that options still carry a noticeable premium for downside protection: contracts with strikes around $60,000 are more expensive than similar options for upside to $70,000. "This gap persists even against a calm backdrop — participants fear not a single report but the overall policy trajectory," the expert emphasizes. Meanwhile, some traders have restored positions targeting $70,000, though risk hedging remains a priority.

Fabian Dori, Chief Investment Officer at Swiss crypto bank Sygnum, takes a more philosophical view. He believes the data confirms that inflation is cooling without signs of recession or a sharp policy reversal. "The probability of a rate hike in September will remain roughly at current levels, and the macro environment for risk assets will not change significantly. If energy prices continue to decline, the combination of these factors will remain favorable for digital assets — even without a policy shift," Dori comments.

Before the September 16 decision, the August jobs report and the key PCE inflation indicator excluding food and energy will be released. If they confirm July's calm, there will be fewer reasons to expect a rate hike, and the foundation for bitcoin will remain stable. However, any unexpected inflation spike would instantly bring tightening expectations back to the market and once again test the cryptocurrency's resilience.

My take: the market is in a wait-and-see phase, and bitcoin appears to have priced in most negative scenarios. However, in conditions where monetary policy depends on one or two reports, volatility can return at any moment. Investors should prepare for sharp moves rather than rely on the current calm.