US CPI Forecast at 3.4% Sets Stage for Crypto Volatility
Bitcoin dips below $77,000 as Wall Street banks converge on a 3.4% inflation forecast.
Bitcoin traded below $77,000 ahead of the US Consumer Price Index release. The digital asset fell nearly 2% in the hours before the data drop. JPMorgan, Goldman Sachs, and other major banks project a 3.4% annual inflation rate. This consensus figure matches the July headline CPI print. Traders await the report to gauge Federal Reserve policy direction.
The US Bureau of Labor Statistics releases the August CPI data on September 11. Economists expect a 0.4% month-over-month increase. This figure is higher than the 0.1% rise recorded in July. Core CPI is projected to remain flat at 0.2% month-over-month. The annual core inflation rate is expected to drop to 2.4% from 2.5%.
Wall Street Consensus on Inflation
Major financial institutions align on a 3.4% median CPI estimate. JPMorgan, Barclays, Morgan Stanley, and Wells Fargo all share this view. Moody’s and Nomura predict a slightly lower figure of 3.3%. The core CPI median estimate stands at 0.2%. This aligns with broader economist forecasts. Brian Bingham of Goldman Sachs notes the Fed focuses heavily on this single print.
Bingham argues that a rate hike priced above 50% creates a policy dilemma. If the Fed holds rates, bond markets may view it as an error. Recent dovish remarks from Fed official Waller suggest a cautious board. The market interprets these signals through the lens of upcoming data. The CPI report serves as the primary catalyst for this decision.
Fed Hike Odds and Market Reaction
The CME FedWatch Tool shows a 69% probability of a 25 basis point hike. This probability increased after US Producer Price Index data rose to 5.4%. JPMorgan expects the Fed to deliver its first hike in December. This would bring the policy rate to the 3.75%-4.0% range. Oil prices fell 1.50% to near $101 per barrel.
BIT analysts predict a Fed pause could trigger a fourth-quarter crypto rally. US debt surpasses $40 trillion while Treasury yields hover near 5%. Bitcoin has rallied 22% recently. Gold prices are up 9.4% over the same period. The US Dollar Index dropped to 99. The 10-year Treasury yield held near 4.95%.
Bitcoin Price Action and Volume
Bitcoin rebounded from $76,545 to trade near $77,210. This movement occurred ahead of the inflation data release. Trading volume declined by more than 11% over the past 24 hours. The drop in volume indicates trader caution. Market participants remain hesitant despite the price recovery. The source GN markets/crypto (en-US) notes this volatility. The outcome of the CPI report will determine the next directional move for the asset.
