Headline inflation is running at 5.1%, well above the Fed's 3% target. Oil, gas, and fertilizer supply shocks tied to Strait of Hormuz tensions are driving the pressure.
Bitcoin has no yield. Higher interest rates make Treasury bills and bonds more attractive, increasing the opportunity cost of holding non-yielding crypto assets.
BTC and ETH pulled back on August 11 ahead of today's data. Bitcoin retreated from $65,000 to $63,912. Watch for 2-3% intraday swings when CPI prints.
A hot CPI print increases odds of a September rate hike from 40-50% to 60-70%. That's bearish for risk assets. A soft print (core below 3.3%) relieves rate-hike pressure.
Long-term holders: ignore intraday noise. Traders: set stops and expect volatility. All investors: monitor Fed officials' afternoon commentary for rate-hike signals.
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