August Core CPI Runs Hot and Bitcoin Slides Below $77,000

Headline inflation landed exactly where economists had put it. The Bureau of Labor Statistics published August's consumer price index on Friday morning, showing prices 3.4% higher than a year earlier and 0.4% higher than in July, both in line with forecasts. Core inflation, which strips out food and energy, held at 2.4% over the year, also as expected. One figure missed. The monthly core reading came in at 0.3% against the 0.2% economists had pencilled in, and bitcoin fell about $1,000 on the print before taking most of it back.

The only number that missed

Three accounts print the same four figures and agree on which one surprised. July's monthly headline was 0.1%, so August's 0.4% is a sharp pickup, and core annual inflation eased from 2.5% to 2.4% while the monthly core went the other way. Benzinga, alone among them, attributes more than a third of the monthly increase to gasoline, which it puts up 3.9% on the month.

By 12:37 UTC bitcoin was back above $77,000 on CryptoPotato's account, after what it described as an initial thousand-dollar drop. CoinDesk had it near $77,300 at roughly the same hour, up 0.7% since midnight UTC and down 0.87% over 24 hours. The same outlet's morning file, written before the data, had $77,374.08.

Four readings of the same bet

How likely a rate rise is depends on where it is priced. The CME FedWatch tool showed a 69% chance of a hike at the next meeting, up from 59% a week earlier and 48% a month before that. Benzinga puts Polymarket at 79% after the print. CoinDesk's morning file, written before the release, had prediction markets at 61% and the trading firm QCP at roughly two-thirds. Polymarket sat at 63% on Thursday, after the producer price report. They are different venues read at different hours, and they do not reconcile. The Federal Open Market Committee meets on 15 and 16 September, and a quarter-point move would take the target range to 375 to 400 basis points.

"This is the worst mix for Bitcoin: a competing 5% risk-free rate without the nominal-growth impulse that usually accompanies yield moves," the trading firm QCP said in remarks CoinDesk carried.

Where the leverage went

Positioning came out before prices did. Crypto futures open interest fell to $59.5 billion from $62.4 billion, and CoinDesk counted $256.3 million of liquidations over 24 hours. Thursday was heavier. The producer price print took $562 million at the peak, with long positions about $484 million of that, on Bitcoin.com News's tally. Zcash carried the sharpest unwind, its open interest down 20.1% to $1.4 billion as the price fell 9%. Breadth turned with it, and 68 of the CoinDesk 100 finished the day higher against Thursday's 86 losers to 14 gainers.

The producer figure itself does not come through cleanly. Bitcoin.com News puts Thursday's PPI at a 0.4% monthly rise. CryptoPotato calls it a 5.4% increase and does not say over what period. Neither outlet acknowledges the other, and we could not establish which window each figure belongs to.

What Friday leaves open

One account reads the same numbers the other way. BeInCrypto writes that the hot core print keeps pressure on the Fed as policymakers weigh whether inflation is easing enough to justify further rate cuts, while every other account treats the release as raising the odds of a rise. The data is not in dispute; the direction is. Rates are doing the work either way. The 10-year Treasury yield sat near 4.94% on Friday morning, with CoinDesk's live file putting it close to 5% and global bond yields at multi-year highs. Brent crude appears twice in that outlet's Friday coverage, at $109 a barrel and below $104, hours apart.

Technically the week went the way these signals usually go. Bitcoin ran $62,000 to $82,000 before a golden cross formed, the crossing of its 50-day average above its 200-day, and it has since slid from about $80,000 to $77,000. The same headline rate landed in line last month and bitcoin sold off anyway. Next week's decision is the test, not Friday's print.