US CPI at 3.4% Triggers Brief Crypto Dip Before Recovery

US August CPI rose 3.4% year over year. This matched analyst expectations exactly. Core inflation also printed at 2.4%, in line with forecasts. The monthly core reading was plus 0.4%. These figures avoided a surprise shock to the market.

Bitcoin initially dropped roughly 1,000 dollars. The price swept lower levels near 76,000 dollars. Buyers then stepped back in to support the asset. Ethereum and altcoins followed a similar pattern. The market absorbed the data without breaking major supports.

Markets Rebound After Initial Panic

Gold and stock futures crashed at the 8:30 a.m. ET release. Both assets erased their declines within 20 minutes. They turned positive shortly after the initial drop. The 10-year yield surged to 4.99 percent. It then reversed and finished lower on the day.

This V-shaped recovery signaled fading panic. Traders viewed the data as manageable. Gold futures printed a long red candle at the open. They then flipped green and climbed higher. S&P futures showed a similar drop-and-reclaim move.

Rate Hike Odds Climb

September rate-hike odds climbed to around 79 percent. Some futures pricing pushed even higher. A fresh hike would raise the cost of capital. This pressure hits risk assets like crypto. Investors remain cautious ahead of the FOMC meeting.

Higher rates have historically pressured liquidity. Participants fear a 25 basis point increase. This risk keeps traders from aggressive positioning. The market faces a binary outcome. Either the Fed holds or hikes rates.

Bulls Defend Key Support Levels

Crypto bulls have defended key levels so far. The data left the door open for a hold. It also allows for a hike. This uncertainty produced choppy price action. The coast is not fully clear yet.

The market digested the in-line CPI print. It staged a rapid recovery across assets. The rate-hike hurdle remains. Attention shifts to the upcoming decision. Whether the defense holds is the open question. Source: GN markets/crypto (en-US).