After the release of U.S. inflation data in August, the crypto market first fell and then rose. Bitcoin declined in the short term after the data was released, but subsequently regained its losses and approached $79,000 again. The market is currently focusing on the Federal Reserve's interest rate decision next week.
CPI is roughly in line with expectations.
Data released by the U.S. Bureau of Labor Statistics on Friday showed that in August, CPI rose 3.4% year-on-year and 0.4% month-on-month, both in line with market expectations. Compared to the core indicator excluding food and energy, the overall data did not significantly exceed expectations.
The core CPI rate slowed down from 2.5% in July to 2.4%, marking a low level since 2021. However, the core CPI rate increased by 0.3% on a month-on-month basis, exceeding economists' expectations of 0.2%. This is also the main reason for the cautious reaction in the market after the data was released.
The market is betting on an interest rate hike next week.
At the time of this inflation report's release, there were only 5 days left until the Federal Reserve's interest rate meeting on September 15th to 16th. CME FedWatch indicates that the market is betting at around 69% for a 25-basis-point interest rate hike by the Fed. The market's pricing forecast is slightly lower, but it still favors an interest rate hike.
Previously, several regional Federal Reserve chairmen supported interest rate hikes at the July meeting. As a result, the market believes that if the Federal Reserve continues to tighten policy next week, it would not be surprising.
Bitcoin rebounds after a short-term decline
Bitcoin opened at around $76,529 on Friday. After the release of the CPI data, the price fell to near $76,040, then quickly rebounded, reaching a high of $79,837 during the session, and is currently hovering around $79,000, with a daily increase of about 3.2%.
Major crypto assets also generally saw increases. Ethereum rose by 7.48% on the day, returning to $2,611; Solana rose by 4.53%, once again crossing the $100 mark. The total market value of the crypto market has rebounded to nearly $2.7 trillion.
Market sentiment also improved with rising prices. The Fear & Greed Index for cryptocurrencies rose from 56 the previous day to 73, entering the "greedy" range. However, the Altcoin Season Index is at 38, indicating that funds still prefer to focus on Bitcoin.
ETF is still flowing out, and derivatives activity is rising sharply.
Despite the price rebound, US spot Bitcoin ETF still recorded a net outflow of approximately $330.5 million on that day, indicating that this round of gains has not yet significantly led to a return of new institutional funds.
- The number of open contracts for encrypted futures has increased to approximately $429.99 billion.
- 24-hour trading volume rises to approximately $877.11 billion
- The total amount of margin calls across the market in 24 hours was approximately 897 million US dollars.
Structurally speaking, the market is still waiting for the Federal Reserve meeting to provide a clearer direction. A short-term rebound has already occurred, but whether institutional funds will follow suit remains an important point to observe in the coming days.
