CPI Surprise Sinks Bitcoin Below $77,000 as Rate-Hike Odds Soar
A hotter-than-expected inflation print pushed the implied odds of a Federal Reserve rate hike to over 87% after the Bureau of Labor Statistics' August Consumer Price Index release. The core inflation measure rose 0.3% month-over-month, beating economists' forecasts.
The increased probability of a rate hike sent Bitcoin's price below $77,000 as traders priced in higher yields on cash and short-term bonds, making the non-yielding asset less attractive to hold.
The correlation between inflation prints and cryptocurrency prices is not perfect, but it tends to show up quickly when CPI surprises to the upside. The timing of this print, close to the next scheduled Fed decision, made traders reassess their expectations from 'hold' to 'hike', causing Bitcoin's price drop.