Bitcoin News Today: Bitcoin surges to $119,500 as U.S. CPI fuels 80% rate cut odds

Crypto markets experienced heightened volatility in anticipation of U.S. inflation data released in early August 2025, with investors closely watching how the Federal Reserve might respond to the latest consumer price index (CPI) figures. The CPI came in at 2.7%, matching expectations, while core inflation exceeded forecasts, prompting uncertainty about the pace of monetary policy easing [1]. As a result, Bitcoin briefly surged past $122,000 before settling near $119,500, and Ethereum climbed to $4,400 [1]. This mixed reaction reflected broader market expectations for a potential 25-basis-point rate cut as early as September, with money markets pricing in an 80% probability of such a move [2].

Prior to the data release, crypto prices had already shown signs of instability, with Bitcoin pulling back from record highs amid profit-taking and growing investor anticipation [4]. The cautious sentiment extended beyond the crypto market, with U.S. stock futures also declining as traditional investors braced for shifting monetary policy [5]. Analysts warned that a hotter-than-expected CPI report could lead to a reassessment of the Fed’s stance, particularly if inflation remains resilient despite a cooling labor market [6]. Morgan Stanley’s Andrew Brenner emphasized the significance of core CPI readings in shaping the Fed’s decisions [6].

The data also revealed unexpected inflationary pressure in the service sector, indicating that inflationary trends may persist beyond traditional high-impact areas like housing and energy [3]. This development has raised concerns that the Fed may not respond as aggressively as previously expected, adding to market uncertainty. The dollar index (DXY) dropped immediately after the CPI report, contributing to the upward movement in crypto prices [9].

Despite the uncertainty, Bitcoin’s rally appeared to be supported by a more balanced market environment, as indicated by the realized P&L ratio [7]. Ether also benefited from the CPI-driven shift in risk appetite, reaching near all-time highs [8]. Stablecoin inflows to exchanges surged in the lead-up to the inflation report, reflecting a risk-off stance among investors as they sought short-term safety amid economic uncertainty [1].

Investor expectations were divided on how the CPI report would influence market sentiment, with 18% anticipating a “risk-on” scenario, 43% expecting a mixed outcome, and 39% foreseeing a risk-off response [5]. Citigroup and RBC Capital Markets noted a more optimistic tone from corporate executives, though concerns over consumer spending and capital expenditures remained [5]. JPMorgan’s market intelligence team suggested a 70% probability of further gains in the S&P 500 if the CPI met or fell short of expectations, with a hotter print potentially triggering a 3% decline [5].

As the year-end policy outlook begins to take shape, the latest CPI data has served as a pivotal moment in recalibrating expectations for Fed action and broader financial positioning. Traders and investors will continue to monitor inflation trends and central bank responses, with the crypto market likely to remain sensitive to macroeconomic developments [5].

Source: [1] CoinCentral, [2] TradeAlgo, [3] AInvest, [4] AInvest, [5] TradeAlgo, [6] TradeAlgo, [7] Mitrade, [8] FastBull, [9] CryptoRank.

URL: [1] https://coincentral.com/crypto-market-climbs-after-u-s-cpi-data-fuels-september-rate-cut-hopes/, [2] https://www.tradealgo.com/news/stocks-halt-rally-as-inflation-report-looms, [3] https://www.ainvest.com/news/supercore-cpi-surprises-sharp-rise-crypto-markets-brace-rate-tightening-2508/, [4] https://www.ainvest.com/news/bitcoin-pulls-record-high-profit-cpi-report-loom-2508/, [5] https://www.tradealgo.com/news/stocks-halt-rally-as-inflation-report-looms, [6] https://www.tradealgo.com/news/stocks-halt-rally-as-inflation-report-looms, [7] https://www.mitrade.com/insights/news/live-news/article-3-1033076-20250812, [8] https://m.fastbull.com/news-detail/ethereum-price-hits-4400-on-cpi-data-and-4339330_0, [9] https://cryptorank.io/news/feed/c885c-cpi-report-triggers-dollar-index-dxy-drop-sends-eth-to-4400-and-btc-to-119-5k