An analysis of Wednesday’s U.S. CPI report suggests that inflationary pressures underneath the headline figure remain relatively persistent despite the softer overall reading.
September Fed Hike Odds Drop After Softer PPI
Expectations for a Federal Reserve rate hike in September have weakened further following a cooler-than-expected CPI report and Thursday’s softer producer inflation data.
CME FedWatch, which tracks market expectations through short-term interest-rate futures, now puts the probability of a September rate increase at about 32%, down from more than 75% a month earlier.
Markets are still pricing in a meaningful possibility of tighter monetary policy later this year, however. The probability of a rate hike by the end of 2026 remains close to 70%.
Sharplink to Put $200M in ETH Into Lido
Sharplink (SBET), an Ethereum-focused digital asset treasury company, plans to allocate $200 million worth of ETH to Lido in an effort to generate additional returns from its holdings.
The company will receive wstETH, which represents ETH deposited into Lido along with the staking rewards generated by those assets. Anchorage Digital will hold the tokens in custody, according to Sharplink.
The strategy allows the company to earn staking income while retaining an asset that can be used throughout decentralized finance markets, including as collateral. The move builds on Sharplink’s existing staking and restaking activities.
CEO Joseph Chalom described the allocation as another step toward making the company’s ETH holdings more productive. Lido said roughly $16.5 billion worth of ETH is currently staked through its platform, while about $10 billion worth of wstETH is being used as collateral.
July PPI Falls Short of Forecasts
U.S. producer prices were unchanged in July, coming in below economists’ expectations for a 0.2% monthly increase. The result followed a 0.1% decline in June.
Producer prices increased 4.7% year over year, below the 4.9% forecast and down from 5.5% in June.
Core PPI, which removes food and energy costs, increased 0.2% during July, compared with expectations for a 0.3% rise and June’s 0.4% increase.
On an annual basis, core PPI rose 4.2%, matching forecasts but slowing from 4.7% the previous month.
Initial U.S. jobless claims also increased to 209,000 from 200,000 a week earlier, exceeding economists’ estimate of 202,000.
Bitcoin remained largely unchanged near $63,500 following the economic data.
Trader Bets $1.07M on Bitcoin Reaching $65.5K
A trader has placed a major short-term bullish bet that Bitcoin will move above $65,500 by Saturday.
Data from Laevitas shows that approximately $1.07 million was spent on call options covering 4,054 BTC at a $65,500 strike price. The contracts expire on August 15.
With BTC currently trading around $63,500-$63,800, the cryptocurrency would need to gain roughly $1,700-$2,000 within two days for the options to finish in the money.
The trade indicates that at least one large market participant expects Bitcoin to make a rapid move higher before the options expire.
PPI Becomes the Latest Market Catalyst
July’s producer inflation figures were closely watched after Wednesday’s CPI report largely met expectations. The latest data also followed weaker-than-expected U.S. employment numbers released last week.
Together, the recent economic reports had increased expectations that the Federal Reserve could leave interest rates unchanged, with the probability of a pause rising to around 63%.
The PPI figures therefore became another important indicator for traders assessing the Fed’s next policy decision.
Bullish Prepares to Release Q2 Results
Bullish (BLSH), the parent company of CoinDesk, is scheduled to announce its second-quarter financial results later Thursday.
Analysts are expecting revenue of around $88.44 million and earnings per share of $1.13. Bullish shares have fallen approximately 41.35% over the past three months.
The company went public exactly one year ago, but its stock now sits roughly 80% below its record high. Shares closed Wednesday at $24.63 and were trading about 1% higher in premarket activity.
Smaller Tokens Outperform Major Cryptocurrencies
While Bitcoin, Ether, Solana and XRP remain relatively flat, several smaller tokens have recorded stronger gains.
OKB, MNT and VVV have each advanced at least 6% over the past 24 hours, placing them among the leading performers in the top 100 cryptocurrencies by market capitalization.
The gains do not appear to reflect a major shift of capital away from larger cryptocurrencies. Bitcoin’s dominance remains close to 59%, a level it has maintained since July.
Bitcoin dominance represents BTC’s percentage share of the overall cryptocurrency market capitalization.
Sticky Inflation Keeps Bitcoin Under Pressure
Macroeconomic writer Mike “Mish” Shedlock believes the underlying inflation picture remains less favorable than Wednesday’s CPI headline suggests.
The July CPI showed a slowdown in consumer prices, partly helped by a temporary decline in energy and gasoline costs. Shedlock argued that these factors can make the headline number appear weaker than the broader inflation environment.
He also pointed to potential limitations in how food and housing costs are reflected in the CPI, including expenses such as property taxes, insurance and home prices.
That could help explain why the modest monthly rise and annual decline in CPI failed to significantly weaken the U.S. Dollar Index. With the dollar remaining relatively firm, Bitcoin received little additional support from the inflation report.
BTC continues to trade in a choppy pattern below $64,000.
