BTC Stalls on Mixed CPI Signals, Fed Rate Hike Odds Soar

Bitcoin (BTC) had a mixed reaction to the latest US inflation data. After dipping below $76,000, BTC pushed back above $79,000 as traders absorbed the news. However, this recovery was short-lived, with the price struggling to sustain momentum due to rising rate hike odds and higher Treasury yields.

The annual core CPI slowed to 2.4%, reaching its lowest level in 66 months. This improvement led some traders to suggest that weaker monthly core inflation could reduce expectations for higher rates. However, the monthly core CPI figure came in at 0.3%, beating the 0.2% consensus estimate.

Headline CPI remained at 3.4% year-over-year, indicating persistent inflation pressure. Energy prices contributed significantly to the monthly increase, with gasoline prices climbing 3.9%. Rising oil prices linked to the US-Iran conflict helped drive this increase.

Rising rate hike odds and Treasury yields created additional headwinds for BTC. Implied odds for a September 16 Fed rate hike climbed to 85%, up from 60% just one week earlier, according to CME Group's FedWatch Tool. Higher rate expectations can create problems for risk assets like Bitcoin.