US CPI Meets Expectations, But September Rate Hike Odds Keep Crypto Bulls on Edge

The US August Consumer Price Index (CPI) matched expectations at 3.4% year over year, with core inflation also coming in line with forecasts at 2.4%. The initial market reaction was a sharp decline in Bitcoin, gold, and stocks before they recovered.

Despite the rapid rebound, investors remain cautious ahead of the Federal Open Market Committee (FOMC) meeting due to the elevated probability of a September interest rate hike, which climbed to around 79% after the data release.

The sharp V-shaped recovery in gold and stocks futures charts suggests that traders quickly absorbed the inflation data. However, the crypto market remained relatively nervous, with Bitcoin dipping by about $1,000 right after the print before buyers stepped back in.