Inflation Eases, Fed Hike Fears Collapse: What it Means for Gold and Bitcoin

The July Consumer Price Index (CPI) rose just 0.1% for the month, and annual inflation slowed to 3.4%. This led to a collapse of Fed rate hike fears, with a 61.9% chance that the Federal Reserve will hold rates in September.

Gold prices gained 0.5% as traders abandoned rate hike bets within weeks. Meanwhile, Bitcoin and other cryptocurrencies bounced back after July's inflation data matched expectations, easing inflation concerns.

CryptoQuant's adjusted Net Unrealized Profit/Loss (aNUPL) measure shows that Bitcoin's most committed investors are currently deeper in the red than the market as a whole. This pattern has marked every major cycle low, including December 2018 and November 2022. However, CryptoQuant notes that this cycle may not need the same level of emotional and financial exhaustion to reach a bottom.

Economist Peter Schiff disagrees with the notion that July's number gives policymakers room to hold rates. He argues that July's 0.1% CPI rise is misleading because it reflects May's oil price crash, not July's rebound at the pump.