U.S. inflation data released Friday presented a mixed picture for markets ahead of the Federal Reserve's September 15-16 rate decision. The Consumer Price Index rose 3.4% year over year and 0.4% month over month, both matching analyst expectations and holding steady with July's annual rate.
Core inflation, which excludes food and energy, showed divergent signals. The annual core rate cooled to 2.4% from July's 2.5%, marking its lowest level since 2021. However, the monthly core reading came in at 0.3%, exceeding the 0.2% that economists had anticipated.
Bitcoin initially declined following the inflation print but subsequently recovered. The cryptocurrency traded near $79,000 by late session, a 3.24% gain on the day, having briefly dipped to $76,040 in the immediate aftermath of the data release.
Technical analysis showed a nascent golden cross forming on Bitcoin's daily chart, with the 50-day exponential moving average crossing above its 200-day counterpart. The Relative Strength Index sat at 59.7, in bullish territory but well below the overbought threshold of 70.
Crypto markets rallied broadly alongside Bitcoin's recovery. Ethereum climbed 7.48% to reclaim $2,611, while Solana rose 4.53% above $100. Total cryptocurrency market capitalization moved back toward $2.7 trillion.
Sentiment indicators shifted with price action. The Crypto Fear and Greed Index jumped to 73, firmly in "greed" territory, after having slipped to 56 the previous day. Derivatives activity accelerated, with open interest in crypto futures rising 1.52% to $429.99 billion and 24-hour trading volume climbing 2.27% to $877.11 billion.
Spot Bitcoin exchange-traded funds registered a net outflow of approximately $330.5 million during the day, suggesting fresh institutional capital remained on the sidelines despite the price recovery.
The inflation report represents the final major economic data point before the Federal Reserve's rate decision. According to CME FedWatch, futures markets price the odds of a 25-basis-point rate increase at roughly 69%, while alternative prediction markets show somewhat lower probabilities.
