Bitcoin has rebounded above $78,000 after U.S. consumer inflation met forecasts in August, although prediction-market traders have raised the chance of a Federal Reserve rate hike to 81%.
US CPI has held at 3.4% in August
The U.S. Bureau of Labor Statistics reported Friday that the Consumer Price Index rose by a seasonally adjusted 0.4% in August after increasing 0.1% in July. Consumer prices climbed 3.4% over the preceding 12 months, unchanged from July’s annual rate.
Both figures matched the forecasts cited in the original report. Still, inflation remained above the Federal Reserve’s 2% target as officials prepared for their Sept. 15–16 policy meeting.
Energy costs accounted for much of the monthly increase. According to the BLS, the energy index advanced 2.1% in August, while gasoline prices rose 3.9% and contributed more than one-third of the increase in the headline index. Shelter costs added 0.3%, and food prices gained 0.1%.
Annual energy inflation reached 16.3%, driven partly by a 27.4% increase in gasoline prices and a 52% rise in fuel oil. Food costs were 2.7% higher than a year earlier, while the food-at-home index rose 2.2%.
Excluding food and energy, core CPI increased by 0.3% from July. The monthly reading exceeded the 0.2% forecast cited in the source report, giving policymakers another sign that underlying price pressure has not fully eased.
On an annual basis, however, core inflation slowed from 2.5% in July to 2.4% in August, its lowest reading since 2021. Shelter prices rose 3% over the year, while services excluding energy services also increased 3%.
Several components helped push core prices higher during August. The BLS recorded monthly increases of 2.7% in airfares, 2.4% in lodging away from home, and 2.3% in communication costs. Used vehicle prices gained 0.4%, while new vehicle prices rose 0.3%.
Medical care costs fell 0.2%, with dental services dropping 0.6%. Motor vehicle insurance declined 0.8%, while recreation and apparel prices were unchanged.
Bitcoin price has recovered above $78,000
Following the 8:30 a.m. Eastern release, TradingView data cited in the source report showed Bitcoin recovering from below $77,000 and moving above $78,000. The rebound followed a sell-off tied to the previous day’s hotter producer inflation reading.
Ether also returned above $2,500, while Solana reclaimed $100, according to the same TradingView data. Both levels had acted as psychological thresholds during the preceding market decline.
The CPI reaction reversed part of the weakness recorded after the August Producer Price Index came in at 5.4% annually, slightly above the 5.3% estimate cited in the source report. Crypto prices fell after the PPI release as traders increased their bets on tighter U.S. monetary policy.
Bitcoin entered the latest inflation reports under pressure from strong employment data as well. As crypto.news previously reported in September, U.S. employers added 162,000 jobs in August, far above the 56,000 forecast cited by Reuters, while unemployment held at 4.1%.
Bitcoin initially reached about $82,262 after the employment release but later fell below $80,000. The report also showed average hourly earnings rising 0.3% from July and 3.1% from a year earlier, adding wage data to the figures Fed officials must consider.
Fed funds futures placed the probability of a September increase at 61% after the jobs report, up from 52% beforehand. Two-year Treasury yields climbed five basis points to 4.38%, while the 10-year yield reached 4.776%.
Fed rate hike odds have climbed to 81%
After Friday’s CPI report, Polymarket traders assigned an 81% probability to a 25-basis-point rate increase at the September meeting, according to MarketWatch’s live coverage. The implied chance stood near 59% before the data, while the probability of no change fell from 41% to about 20%.
Polymarket prices represent wagers placed by participants and can change throughout a trading session. They are not an official Federal Reserve forecast or a direct measure of how Federal Open Market Committee members intend to vote.
The federal funds target range currently stands at 3.50% to 3.75%. A quarter-point increase would take it to 3.75% to 4% and would be the Fed’s first hike since July 2023.
A September policy analysis published before the CPI report found that CME FedWatch had placed the probability of a quarter-point hike at 66%. Polymarket odds had reached 72% after Fed Governor Michael Barr backed a decisive response if inflation failed to ease.
At the time, the analysis identified $75,000 as an important Bitcoin support area and $82,000 to $86,000 as resistance. Bitcoin had gained 25% in August, while U.S. spot Bitcoin exchange-traded funds attracted $3.52 billion across 16 of 21 trading sessions.
American investors now face competition between crypto assets and rising yields on Treasury securities if the Fed increases borrowing costs. Higher rates raise the return available on government debt and money-market products, which can affect demand for assets without fixed yields.
Oil supply risks have kept inflation concerns elevated
Energy prices remain a key issue for the Fed after gasoline drove more than one-third of August’s monthly CPI increase. Middle East fighting has disrupted oil flows and increased concern that fuel costs could keep headline inflation above the central bank’s target.
Brent crude remained above $100 on Friday despite falling nearly 4%, according to market data cited in the source report. Folha reported that the benchmark slipped toward $104 after approaching $110 earlier in the session.
The decline followed reports of a possible meeting between Iran and Gulf states, but shipping risks remained after Iran-backed Houthi forces captured Perim Island in the Bab al-Mandeb Strait. The island sits along a major route used for oil and commercial shipping between the Red Sea and the Gulf of Aden.
One day earlier, the European Central Bank raised its deposit rate by 25 basis points to 2.5%. The ECB attributed its decision to persistent inflation, including pressure from energy prices and the Middle East conflict, and projected that eurozone inflation would remain above its 2% target for an extended period.
The International Energy Agency said on Friday that attacks on oil tankers and facilities had contributed to supply disruptions, while Saudi output had fallen to 6 million barrels per day. The agency estimated that worldwide oil supply would decline by 5.7 million barrels per day in 2026.
