U.S. Inflation Data Delivers Mixed Signals as Core CPI Runs Hot
The latest Consumer Price Index (CPI) report from the Bureau of Labor Statistics gave markets a mixed bag on Friday. Headline inflation rose 3.4% year-over-year and 0.4% month-over-month, both matching consensus estimates and matching July’s annual pace. However, core CPI—which excludes food and energy—told a more nuanced story. The annual core rate cooled to 2.4% from 2.5%, its lowest level since 2021, but the monthly core reading came in at 0.3%, exceeding the 0.2% analysts had forecast. That hotter-than-expected monthly core figure is the detail markets zeroed in on as the Federal Reserve approaches its September 15-16 policy meeting.
Fed Rate Hike Probabilities Tick Up
The report lands five days before the Fed’s next decision, the last major data point Chair Kevin Warsh’s committee will see before voting. Warsh used his first Jackson Hole keynote to say the Fed still has “work to do” on inflation. Three regional Fed presidents already dissented in favor of a hike at the July meeting, so a move would not be entirely unexpected. CME FedWatch, which tracks probabilities implied by 30-day Fed funds futures, puts the odds of a 25-basis-point hike at roughly 69%. Prediction markets are slightly more cautious: Polymarket prices the same outcome at 62%, and Myriad—the platform run by Decrypt’s parent company Dastan—has it at 61%.
Crypto Market Rallies Despite Initial Dip
Bitcoin initially dipped on the news but quickly reversed, climbing back toward $79,000 as the broader market digested the implications for interest rates. Ethereum led major assets higher, surging 7.48% on the day to reclaim $2,611, while Solana rose 4.53% back above $100. Zcash stood out across the top 10, gaining 23.09% over the past week alongside a 4.71% daily gain. Total crypto market capitalization climbed back near $2.7 trillion.
Sentiment swung hard with the price action. The Crypto Fear & Greed Index, which had slipped to 56 after Thursday’s hot producer-price report, jumped back to 73—firmly in “greed” territory—while the Altcoin Season Index sits at 38, indicating Bitcoin still dominates the ecosystem as traders lack enough risk appetite for a full altcoin rotation. Spot Bitcoin ETFs continue to show a net outflow of roughly $330.5 million on the day, a reminder that this rally hasn’t yet pulled fresh institutional money off the sidelines.
Derivatives activity climbed alongside the rally. Open interest across crypto futures rose 1.52% to $429.99 billion, with 24-hour trading volume up 2.27% to $877.11 billion. The volatile session triggered $897.09 million in liquidations, split between $493.85 million in long positions and $403.24 million in shorts.
Bitcoin Price Analysis: Golden Cross Forms on Daily Chart
Bitcoin opened Friday at $76,529 and briefly dipped toward the day’s $76,040 low in the minutes after the CPI print—an initial hawkish reaction before the market reversed hard. Bulls have since taken over, pushing BTC as high as $79,837 through the session. The asset now trades near $79,007, a 3.24% gain on the day and nearing the psychologically significant $80K mark.
Golden Cross Signals Medium-Term Trend Shift
The chart’s biggest structural shift is the exponential moving average (EMA) crossover. Bitcoin’s 50-day EMA has now crossed above its 200-day EMA, forming a golden cross—a setup traders read as confirmation that the medium-term trend has flipped bullish rather than a warning of a coming reversal, which the opposite death cross would signal. The crossover just happened, meaning it is not technically confirmed yet; there isn’t yet a significant gap between both averages, so traders would be wise to keep their champagne in the refrigerator for a couple of days.
Momentum Indicators Support Upside
The Relative Strength Index (RSI) sits at 59.7—bullish territory and well below the 70 reading that would flag the move as overbought. The Average Directional Index (ADX), which measures trend strength regardless of direction, reads in the 40s, comfortably above the 25 threshold that separates a real trend from noise, with the DI+ line above DI- confirming buyers remain in control.
Key Levels to Watch Ahead of Fed Decision
The key zone to watch sits below current prices: a Fibonacci retracement drawn off the summer’s $68,858 low to the $82,281 high hit in late August places Bitcoin’s golden zone—the retracement band bulls need to defend—between $73,986 and $75,569. Above that, the $82,281 high from late August remains the level that needs to break for the rally to extend before the Fed’s rate decision on Wednesday at 2:00 PM ET.
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Disclaimer: The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment, or other advice.
