Bitcoin balances ahead of the Fed verdict: U.S. July inflation holds steady at 3.4%
The latest U.S. Consumer Price Index (CPI) report for July brought no surprises, but it also added no clarity to the markets. Annual inflation settled at 3.4%, fully matching the Wall Street consensus forecast. The core indicator, excluding volatile food and energy prices, slowed to 2.5%. For Bitcoin (BTC), this means only one thing: the probability of a Federal Reserve (Fed) rate hike in September remains at the level of a coin toss — roughly 50/50.
Analysis of data from the U.S. Bureau of Labor Statistics shows that the monthly price increase was a modest 0.1%, fully offsetting June's 0.4% decline — the sharpest since April 2020, driven primarily by cheaper energy. The annual pace slowed from 3.5% to 3.4%, which is certainly a positive signal, but insufficient for decisive action by the regulator.
Futures market split: pause or tightening?
The key intrigue remains: CME FedWatch data before the report's release indicated a 54.1% probability of holding the rate at its current level and 45.9% for a 25-basis-point hike at the September 16 meeting. However, a week earlier, markets were more inclined toward tightening, estimating the odds of a hike at 54.4%. After the fresh figures were released, the balance shifted again, but no definitive answer emerged.
Adding particular piquancy to the situation is the weak July jobs report: the number of jobs fell by 23,000 against forecasts of an 80,000 increase. This cools the fervor of the Fed's "hawks," but inflation, still above the 2% target, does not allow the "doves" to relax. Fed Chair Kevin Warsh has held the rate in the 3.50–3.75% range since May under pressure from President Trump, who demands lower borrowing costs. At the July meeting, three board members voted for a hike, indicating a serious rift within the committee.
Bitcoin holds its breath
Bitcoin's reaction was notably restrained: the price held near $64,039, losing only 0.2% over the day. The market seemed to exhale, realizing that no "hot" inflation surprise had occurred, but it also received no reason for optimism regarding an imminent policy easing.
Far more telling is the situation in derivatives. Managing Partner at DWF Labs, Andrey Grachev, notes that the options market retains a significant premium for protection: puts at the $60,000 level with late-August expiration cost more than calls testing $70,000. This points to deep caution among participants regarding the overall direction of monetary policy, rather than a reaction to a specific release.
Meanwhile, traders continue to build long positions at $70,000, which looks constructive, but with hedging. Two key reports remain before the Fed meeting — the August jobs report and the PCE inflation reading. If they maintain a calm tone, the odds of a pause will rise, and Bitcoin will get a breather. But any new bout of inflation or unexpected job growth will instantly bring the probability of a rate hike back to the forefront and send BTC to retest its strength.
My view: The market is in a classic phase of uncertainty ahead of a major decision. Bitcoin, as a high-risk asset, remains hostage to macroeconomic data. In such a situation, a sensible strategy is not to hedge against a specific outcome, but to prepare for volatility in both directions. The September Fed meeting will be the trigger that determines the medium-term trend, and so far, the data gives no clear advantage to either side.