Bitcoin holds near $114K as markets anticipate September rate cuts after CPI meets expectations
Crypto markets steadied after U.S. Consumer Price Index (CPI) data came in largely as expected for August, keeping a September rate cut on the table and steering odds firmly toward a quarter-point move.
Headline CPI rose 2.9% year over year, matching forecasts, while core CPI held at 3.1%, according to the U.S. Department of Labor . The monthly headline CPI increased 0.4%, up from July's 0.2% and slightly ahead of the expected 0.3%, while core inflation rose 0.3% , in line with estimates.
Soft inflation data has strengthened calls for a Federal Reserve policy pivot. Odds for a 25 basis point move climbed. Traders on prediction market Polymarket suggest there's an 88% likelihood of lowered rates after Thursday’s release. Meanwhile, the probability for a 50 bps cut faded on CME FedWatch , signaling a dovish-but-measured path rather than an aggressive pivot.
The Federal Reserve's Federal Open Market Committee (FOMC) last cut the federal funds rate on December 18, 2024, lowering it by 25 basis points to a target range of 4.25%–4.50%.
Wednesday's print followed yesterday’s cooler-than-expected Producer Price Index report and a three-day run of net inflows into spot crypto ETFs.
Price action stayed orderly amid the news. According to The Block's price page , bitcoin traded within the $113,000–$114,000 band that analysts have flagged as a “bullish gate,” while ETH is currently trading slightly above $4,400 . Blockhead co-founder and managing editor Timothy Misir noted $757 million of net inflows to spot bitcoin ETFs on Sept. 10 and $172 million to ether funds, saying another soft inflation print “would likely accelerate the current risk-on move.”
Still, options markets remained defensive into the data. Short-dated ETH derivatives implied volatility sits below weekly measures, and the BTC/ETH put skew is still elevated. Traders are holding on to downside protection even as flows rebuild.
With CPI out of the way, traders are likely watching whether bitcoin can log a daily close above $113,000–$113,500 to open the $118,000 path, Misir notes. Failure to meet this close keeps the $109,000–$107,000 support zone in play.
At the same time, attention now shifts to next week’s FOMC meeting. Expert consensus from veterans like Goldman Sachs CEO David Solomon suggests the Fed will reduce funding rates, an outcome that’s typically bullish for BTC and risk assets.
Paul Howard, senior director at crypto market maker Wincent, shared a similar take. He also stated that markets are pricing in three rate cuts by early next year after the latest inflation data.
“We are bullish for rate cuts following the PPI and CPI data release," Howard told The Block. "Analysts are pricing in 75bps before 2026, Q1, and if so, this aids the narrative for inflationary cryptocurrency prices this coming quarter. With interest rate cuts set to inject more hot money, we could expect BTC as an inflation hedge to move higher."
