Bitcoin Flat as Core US Inflation Holds at 2.9% in August

Bitcoin gained slightly as the Bureau of Labor Statistics reported that inflation increased 2.7% year-over-year in August, coming in only a bit hotter than July’s 2.6% reading. Core consumer spending, which excludes volatile food and energy prices, shows that inflation has risen 2.9% compared to the same period last year.

“While this reinforces the Fed’s narrative of gradually easing price pressures, it still leaves policymakers balancing sticky inflation with signs of a softer labor market,” Fabian Dori, chief investment officer at Sygnum Bank, told Decrypt.

“For investors, the implications are twofold: If inflation trends lower, risk assets may find support from confidence in the Fed’s easing cycle; but any upside surprises in coming data could push back short-term rate cut expectations, weighing on equities and boosting the dollar,” he added.

Bitcoin dipped as low as $109,000 in the past 24 hours, but has rebounded slightly to about $109,300 early Friday morning. BTC has fallen 1.5% in the past day and 5.9% over the past week, according to data from crypto price aggregator CoinGecko.

It’s been a tough week for the world’s oldest cryptocurrency. At one point yesterday, more than $1 billion worth of crypto futures contracts had been liquidated over the previous 24 hours, as asset prices broadly fell alongside Bitcoin.

Things were little improved early this morning. In the past 24 hours, $970 million worth of contracts have been forced to close. Of those, $852 million of them were long contracts betting that prices would improve. The largest single liquidated position was a $19.2 million ETH-USDT contract on Singapore-based exchange HTX, according to CoinGlass.

That’s left users on Myriad, a prediction market owned by Decrypt parent company DASTAN, more pessimistic about the direction the Bitcoin price will head next. There’s now 69% of users predicting that BTC will fall to $105,000 before it’s able to break out to $125,000. Two days ago, the bears and bulls had been evenly tied.

That could be in part because of new tariffs President Donald Trump said will go into effect October 1. The new policy, which he announced late Thursday night on Truth Social, adds a 100% duty on branded drugs and 25% on heavy-duty trucks. Trump also said he would implement 50% tariffs on kitchen cabinets and bathroom vanities, and a 30% tariff on upholstered furniture.

Dean Chen, an analyst for crypto derivatives exchange Bitunix, told Decrypt that inflation coming in at its forecasted level helped keep market reactions muted.

“However, the recently announced high tariffs remain an uncertain factor that could deliver one-off inflationary pressure while weighing on growth,” he said. “Overall, capital flows remain cautious, with risk assets under pressure and inflation-hedging sentiment persisting.”

He added that the tariffs will be a key concern for Bitcoin traders.

“Traders should keep leverage strictly controlled, scale into positions gradually, and validate breakouts/fake-outs through capital flows,” Chen added. “For BTC, focus on $108,000 as support and $111,000 as the near-term resistance zone.”

The president has also been using the social media platform, which is majority-owned by the Donald J. Trump Revocable Trust,  to antagonize Federal Reserve Chair Jerome Powell.

“If it weren’t for Jerome ‘Too Late’ Powell, we would be at 2% right now, and in the process of balancing our budget,” the president wrote. “The good news is that we’re powering through his incompetence, and we’ll soon be doing, as a country, better than we have ever done before!”

Bitcoin investors pay close attention to consumer spending because it’s the primary inflation gauge for the Federal Open Markets Committee. A surprise in spending data can shift rate expectations and yield curves. When there’s a big shift one way or another, it can set off volatility for equities, fixed income products, foreign exchange rates, and BTC.

Traders have also been looking to public comments from Fed chair for hints on how the FOMC may lean the next time it meets in October.

The CME FedWatch Tool now shows that traders give 87.7% odds to the FOMC approving another 25-basis point cut next month. That’s fallen slightly from 91.9% last week. The CME data skews more optimistic than users on Myriad. Participants in markets predicting how the FOMC will set policy in October show that 68% of users think there’ll be another 25-basis point decrease.

In a speech at the Greater Providence Chamber of Commerce in Rhode Island on Tuesday, Powell sounded less alarmed about tariffs than he did earlier this year.

“The overall economic effects of the significant changes in trade, immigration, fiscal and regulatory policy remain to be seen,” he said. “A reasonable base case is that the tariff-related effects on inflation will be relatively short lived—a one-time shift in the price level.”

Editor’s note: This story was updated to add comments from Sygnum Bank and Bitunix analysts.