Key Takeaways

• CMC20 rose 3% between two market snapshots.
• Bitcoin reclaimed $79,000 after the CPI release.
• Ethereum rose 5%, outperforming other large-cap assets.
• Expectations for a Federal Reserve rate hike increased after the core CPI data.
• A hike being priced in does not necessarily indicate expectations for further tightening.

Bitcoin Reclaims $79,000 as Gains Broaden

Two CoinMarketCap snapshots taken at the time of the CPI release and nearly two hours later showed a recovery across major crypto assets. Bitcoin was trading at $77,870 in the earlier snapshot, while Ethereum changed hands near $2,500. Bitcoin later returned above $79,000 as gains spread across the market.

Why Crypto Rallied Despite Firmer Core CPI

According to the U.S. Bureau of Labor Statistics, headline CPI increased 0.4% in August, while annual inflation remained at 3.4%. Both figures matched expectations. Annual core inflation also came in at the expected 2.4%, down from 2.5% in July. CPI is closely watched in rate markets because it provides a timely measure of changes in consumer prices that can influence expectations for Federal Reserve policy. Coindoo’s CPI report examines the result and its broader implications for Federal Reserve policy.

Monthly core CPI was firmer than expected, rising 0.3% instead of the 0.2% economists had forecast. However, the report did not produce an above-consensus headline CPI or annual core CPI reading that might have shifted expectations toward additional tightening after September. The response in Treasury yields and the dollar showed why that distinction mattered to crypto traders.

Higher Rate-Hike Odds Did Not Halt the Rally

The CME FedWatch Tool put the probability of a 25-basis-point increase at the September 16 meeting at 85% at the time of writing, compared with a 15% chance of no change. The repricing had already begun before the CPI release: hike odds were 72% one day earlier, 59% one week earlier and 48% one month earlier.

Reuters reported that the two-year Treasury yield rose 4.4 basis points after the release. The apparent contradiction was that the September hike became more likely, while the initial market reaction did not indicate expectations for a materially more restrictive policy path afterward. The dollar was broadly flat, and the 10-year Treasury yield declined after initially moving higher.

That combination left room for risk assets to rise even as the short end of the Treasury curve priced in a greater probability of a September increase.

Altcoins Outpace Bitcoin

Ethereum’s 5% gain exceeded Bitcoin’s 2% rise. XRP, Solana and Zcash also moved higher, indicating that the market’s advance extended beyond Bitcoin after the CPI release.

Hyperliquid’s HYPE token rose 2%, from $81.5 to $83.3, and remained above the $77-$79 support zone highlighted before the report in Coindoo’s HYPE price analysis. The token’s rebound aligned with the broader macroeconomic move, while its token-specific breakout case still depends on reclaiming higher resistance levels.

What Could Challenge the CPI Rally?

Markets now view a September rate hike as likely, although it is not certain. The larger risk for crypto would be a renewed rise in Treasury yields and the dollar that signals investors are pricing in further tightening after the meeting. Bitcoin holding above $79,000 while those indicators stabilize would support the initial CPI reaction; a renewed increase in both would challenge it.

Original article appeared first on Coindoo.