Bitcoin Falls Despite Inflation Report That Eased Rate Hike Concerns

The US Consumer Price Index (CPI) data for July was released on Thursday and showed headline inflation increasing by 0.1% month over month and 3.4% annually. Core inflation, which excludes volatile food and energy prices, rose 0.2% on the month while easing to an annual rate of 2.5%. This reduction in perceived likelihood of another Federal Reserve interest-rate increase in September led to a decrease in futures markets' probability of a rate hike to approximately 38%, down from 46% before the report's release.

Maksym Sakharov, co-founder and CEO of WeFi, stated that 'the softer print is welcome since the Fed will have more breathing room for deciding on a rate hike, but one release will not settle the argument over the inflation path due to pre-built volatility.' He also noted that the bigger story was the positioning already built before the release, which left one side exposed to liquidations and subsequent volatility in financial markets.

The report contained details that could allow the Fed to remain patient. Shelter costs rose by only 0.1%, while energy prices declined 1.5% and gasoline fell 2.9%. With the latest inflation report failing to deliver a decisive market signal, investors will turn their attention to several upcoming events, including the Federal Reserve's Jackson Hole gathering later in August.