Bitcoin gave back a few hundred dollars on Wednesday after the U.S. Bureau of Labor Statistics published July CPI data that matched expectations, cutting short a rally that had pushed the cryptocurrency to $64,400 just before the release. The regular CPI came in at 3.3% to 3.4%, in line with forecasts, while core CPI rose 2.5% — a decline from June, helped by falling energy costs. The move leaves bitcoin hovering near $64,000, with traders still weighing what the data means for the Federal Reserve's next move.
The pre-CPI run
Bitcoin had been on a tear heading into the release. After touching a low of $63,200 yesterday, the price jumped to $64,400 in the hours before the data hit. That run-up reflected optimism that a modest inflation reading would keep the Fed from raising rates in September, a scenario that tends to support risk assets like crypto.
What the data showed
The July CPI report came in roughly where economists expected. Headline inflation ran at 3.3% to 3.4% year over year, while core CPI — which strips out food and energy — rose 2.5%. The core figure marked a slowdown from June, with the BLS attributing the decline to decreasing energy costs. The report also comes on the heels of a jobs report that showed a substantial decline in non-farm payrolls, a surprise that had already raised questions about the strength of the labor market.
Fed rate expectations
Ahead of the release, market commentary suggested that a modest CPI increase would reduce the chances of a Fed rate hike in September. That narrative helped fuel the pre-CPI rally. With the data now out and matching forecasts, the immediate reaction was muted — bitcoin dipped a few hundred dollars, but the move was small compared with the swings seen earlier in the week.
What traders are watching
Analysts remain adamant that CPI is the key to understanding cryptocurrency's next big move. The thinking is that if inflation stays contained, the Fed has more room to hold rates steady or even cut, which would be a tailwind for bitcoin. But the weak jobs report complicates the picture — a slowing labor market could push the Fed toward easing, but it also signals broader economic strain. For now, the market is waiting on the Fed's September meeting, where the latest inflation and jobs data will be the deciding factors.
