Inflation data surprises slightly, growing hope for rate cut

The inflation figures for August have finally been released, and the U.S. economy appears to be catching a small breather. The Consumer Price Index (CPI) rose 2.5% year-on-year, slightly below the expected 2.6%. This slight decrease, mainly driven by falling energy prices, has been positively received by the markets. There is growing hope that the Federal Reserve (Fed) may soon ease its monetary policy, which could benefit both traditional and crypto markets.

Core Inflation Remains a Concern While overall inflation has dipped slightly, core inflation—which excludes volatile sectors like energy and food—remains steady at 3.2%. This figure aligns with forecasts and offers a clearer insight into the underlying price trends within the economy. It is a critical factor for the Fed in determining interest rate policy.

Outlook for a Rate Cut There is widespread speculation that the Federal Reserve may soon cut rates by 0.25%. This would signal that the U.S. economy is robust enough to continue growing without entering a recession, while the rate cut would offer additional support for further economic expansion.

A rate cut could have positive effects on both equity and crypto markets, as lower interest rates typically encourage more investment in riskier assets like cryptocurrencies.

Increase in Capital for U.S. Crypto Funds In anticipation of the inflation figures, crypto funds in the United States saw a remarkable increase. Bitcoin and Ethereum ETFs (Exchange-Traded Funds) experienced significant inflows over the past day. For the first time in weeks, more than $100 million was invested in Bitcoin funds, while Ethereum funds achieved their best result in nearly a month.

According to data from Farside Investors, eleven Bitcoin funds collectively raised $117 million. Fidelity‘s FBTC fund contributed the largest share with $63.2 million. Notably, there was no outflow, even from Grayscale‘s GBTC fund, indicating strong confidence in the crypto market.