Ethereum News Today: Bitcoin Surges to $118,000 as U.S. CPI Eases and Fed Rate Cut Odds Rise to 82.5%

Bitcoin and Ethereum experienced notable gains in late July and early August 2025 as U.S. inflation moderated to 2.7% year-over-year, below the expected 2.8% [4]. The U.S. Bureau of Labor Statistics reported that the Consumer Price Index (CPI) rose 2.7% over the past twelve months, with a 0.2% monthly increase, following a 0.3% rise in June. While the headline figure was seen as positive, core CPI—which excludes volatile food and energy prices—rose 3.1% year-over-year, slightly above economists’ forecasts [5].

Bitcoin climbed to $118,000 following the inflation report, despite showing a 1.1% drop over the previous 24 hours. Ethereum, on the other hand, surged 3.2% to $4,300 in the same period, while Solana declined by 1.7% [1]. These movements reflect the market’s response to the data and evolving expectations about the Federal Reserve’s policy direction.

The inflation print came after the Fed left interest rates unchanged for a fifth consecutive meeting, with two board members advocating for an immediate cut. The central bank has been cautious about lowering rates this year, fearing that President Donald Trump’s proposed tariffs might reignite inflation. However, market participants have increasingly priced in a rate cut, with the probability of a September reduction standing at 82.5% after the CPI data, down slightly from 86% the previous day [1].

Experts have noted that while tariffs have not yet had a major inflationary impact due to ongoing exemptions and inventory stockpiles, the effects may begin to appear later in the year as those buffers are depleted. Scott Lincicome of the Cato Institute pointed out that companies have already announced price hikes, and more are expected as tariffs take full effect [1].

The U.S. dollar weakened against major currencies following the inflation report, providing further support to crypto assets. The EUR/USD pair rebounded as traders adjusted their expectations for a potential rate cut in September [6]. The broader market sentiment shifted toward risk-on assets, with Bitcoin and Ethereum benefiting from the improved macroeconomic outlook.

Despite the optimism, core inflation remains a concern for the Fed and investors alike. While the headline CPI showed signs of cooling, the core rate remained elevated, highlighting the complexity of inflation dynamics. Russell Price, chief economist at Ameriprise Financial, emphasized that CPI is heavily weighted toward shelter costs, which have shown some signs of moderation [1]. This development offers a more favorable trajectory for inflation in the near term, though the central bank remains wary of potential upside risks from tariff-related pressures.

As the Fed approaches its next policy meeting, the crypto markets remain highly sensitive to any shifts in the inflation narrative. Investors continue to monitor CPI data and other economic indicators closely, with expectations for lower interest rates still firmly embedded in asset valuations [1]. The current environment suggests that both Bitcoin and Ethereum could continue to benefit from a dovish monetary policy stance, should the Fed proceed with its planned easing.

[1] Bitcoin News Today: July CPI Rises 2% as Crypto Prices Jump Fed Easing Hopes

(https://www.ainvest.com/news/bitcoin-news-today-july-cpi-rises-2-7-crypto-prices-jump-fed-easing-hopes-2508)

[2] Ethereum Open Interest Nears $60 Billion as ETH Hovers

(https://decrypt.co/334708/ethereum-open-interest-60-billion-eth-all-time-high)

[4] U.S. consumer prices rise by 2.7% in July

(https://www.investing.com/news/economic-indicators/us-consumer-prices-rise-by-27-in-july-4185077)

[5] US CPI Stays at 2.7% But Inflation Rises Sharply: Details

(https://coinpedia.org/news/us-cpi-stays-at-2-7-but-inflation-rises-sharply-details/)

[6] EUR/USD rebounds after mixed US CPI; Fed rate cut bets

(https://www.mitrade.com/insights/news/live-news/article-1-1032985-20250812)