Bitcoin briefly spiked to $79,837 on Friday after the U.S. Bureau of Labor Statistics released August Consumer Price Index data that matched economists' expectations. The cryptocurrency surged on the data release but continued to experience sharp price swings throughout the trading session.
The volatile price action triggered significant liquidations across cryptocurrency markets. Long position liquidations reached $104 million, while short positions saw $100 million in liquidations. Overall crypto market liquidations topped $732 million, with wiped-out short bets accounting for $424 million of that total.
Bitcoin's price movement reflected broader uncertainty following mixed economic data. The cryptocurrency had declined to a one-week low of $76,651 following the release of hotter-than-expected Producer Price Index data less than 24 hours earlier. Friday's CPI release prompted a rally that pushed Bitcoin past $79,800 by midmorning before subsequent selling pressure brought the price down to $77,300.
At 12:07 p.m. EST, Bitcoin was trading above $77,800, showing a daily gain of 1 percent with a market capitalization near $1.57 trillion.
Fed Rate Hike Odds Rise to 82 Percent
Following the CPI release, prediction market odds for a Federal Reserve rate hike of 25 basis points rose to 82 percent. Economists suggested the matching CPI data increased the likelihood of rate increases. One analyst noted that if a hike occurs, the odds of a second hike in December have risen to 74.2 percent.
Stagflation Concerns Cited
Ray Dalio highlighted concerns about stagflationary pressures, noting that while the U.S. attempts to hold short-term rates down, long-term rates are climbing. Dalio pointed to effects already visible in financial markets, including weakening dollar movements and gold price action.
According to Dalio, rising rates begin to affect stock market valuations. With bond prices declining and stocks rising, the prospective returns of stocks become low compared to bonds, creating broader stock market pressure. Dalio described this dynamic as a stagflationary environment that presents challenges for Federal Reserve policy decisions.
