Bitcoin Bulls Hold Steady Despite Stagflation Concerns
Crypto experts remain optimistic on Bitcoin even as U.S. economic data signals potential stagflation, highlighting expectations of Federal Reserve rate cuts and a long-term structural bull market for digital assets.
Thursday’s data showed consumer prices rose 0.4% month-on-month in August, bringing the annualized inflation rate to 2.9%—the highest since January. First-time unemployment claims hit a four-year high, and the Bureau of Labor Statistics revised down its jobs data for the year ending March 2025.
Despite these signals, traditional markets shrugged off the risks. The S&P 500 hit record highs, and the dollar index declined 0.5% to 97.50 as investors focused on the anticipated Fed rate cuts rather than inflation.
Bitcoin and Altcoin Performance
Bitcoin (BTC) briefly topped $116,000, building on a recent technical breakout, and was trading near $115,244. Altcoins, including Solana (SOL), Chainlink (LINK), and Dogecoin (DOGE), saw stronger 24-hour gains.
“Bitcoin and crypto more broadly are absorbing capital as a hedge against fiat dilution and fiscal instability, not purely as a risk-on asset like in previous cycles,” said Shane Molidor, founder of crypto advisory platform Forgd.
Fed Rate-Cut Expectations Support Markets
Traders widely expect a 25 basis-point Fed rate cut to 4% on September 17, with further reductions likely by year-end. Analysts anticipate the Fed will prioritize labor market support over inflation, reinforcing optimism in crypto markets.
Le Shi, managing director at crypto market maker Auros, noted that the so-called Magnificent 7 tech stocks, heavily invested in AI and R&D, remain resilient to stagflation fears, supporting positive crypto sentiment.
Sam Gaer, CIO at Monarq Asset Management, added that even if stagflation temporarily pressures markets, Bitcoin’s long-term appeal as a scarce, non-sovereign asset remains strong. Markus Thielen, founder of 10x Research, expects disinflation trends to resume, providing a favorable backdrop for risk assets.
Altcoins in Focus
Solana (SOL) has gained momentum, with SOL/BTC trading at a seven-month high and testing key resistance levels. Over $1 billion has been raised across various SOL vehicles, driving rotation into the token.
Other notable altcoins include Ethena’s ENA and its synthetic dollar USDe, and Hyperliquid’s HYPE token. Molidor said younger investors are gravitating toward high-beta, leveraged trades, making platforms like Hyperliquid appealing for volatility-driven strategies.
Falling Fed rates also enhance the yield appeal of crypto products like Ethena, creating opportunities where returns exceed those of traditional fixed-income instruments.
Tokens to Watch
Auros highlighted CRO, SOL, BNB, and HYPE as key tokens likely to benefit from continued liquidity inflows, macro tailwinds, and rotation into high-demand altcoins.
