Bitcoin and Altcoins Falling Despite Cooling US CPI?

Bitcoin and altcoins continue to adopt a wait-and-watch before making any big move as the futures for all three US indices are currently in the negative territory

Bitcoin and altcoins witnessed a brief moment of selling pressure after the release of the US Consumer Price Index (CPI) for the month of August, with prices dropping more than 1% soon after the announcement. However, the trend quickly reversed, and both Bitcoin and major altcoins began to register gains.

At the time of writing, Bitcoin is trading at an average price of $49,634. BNB is also up by 0.7%, dogecoin by 1.3%, and XRP by 0.4%. Chainlink, polygon, and shiba inu are also trading in green, registering gains of 1.2%, 0.8%, and 0.7%, respectively.

The year-over-year surge in the US CPI stood at 2.5%, which is quite on the expected lines, dropping from the previous 2.9%. The reading also marks a 20-month low for the inflation rate. Moreover, the core CPI also dropped to 0.3% from the earlier 0.4%.

Traders and market analysts were expecting a lower rate of inflation, which could have signaled the Federal Reserve to begin cutting interest rates. However, the sticky inflation could delay the rate cuts further.

Earlier this year, the Fed had undertaken an aggressive campaign of interest rate hikes in a bid to curb the rising inflation. Now, with inflation cooling off a bit, the market is expecting the central bank to begin cutting rates.

According to the FedWatch Tool by CME Group, traders are now expecting the Fed to initiate its rate cut cycle next week with a 25 basis point reduction. Moreover, the futures are also pricing in a total of 100 basis points in cuts by the end of the year.

Bitcoin and Altcoins Waiting for US Futures, Fed Rate Cut Cycle

Both Bitcoin and altcoins continue to adopt a wait-and-watch approach before making any big move as the futures for all three US indices are currently in the negative territory as of press time.

The Dow Jones futures are down by 0.03%, the S&P 500 futures are trading at a loss of 0.09%, and the Nasdaq 100 futures have dropped by 0.2%.

Meanwhile, the futures for the US short-term interest rates have dropped following the CPI report as traders have scaled back the expectations of a jumbo 50 bps Fed rate cut.