Bitcoin surged past $114,000 on Thursday, lifting the overall crypto market capitalization by roughly 2% as traders positioned themselves ahead of a crucial US inflation report. The Bureau of Labor Statistics is set to release the Consumer Price Index (CPI) for August on September 11 at 8:30 a.m. Eastern Time, a data point closely watched by investors for signs of the Federal Reserve’s next policy move.
Economists polled by FactSet predict consumer prices rose 0.3% month-over-month and 2.9% year-over-year in August. Core inflation, which excludes volatile food and energy costs, is forecasted at 3.1% annually.
A softer-than-expected reading could increase pressure on the Fed to cut interest rates by up to half a percentage point at its September 16–17 meeting. Lower rates would likely weaken the dollar, shift capital out of bonds, and funnel liquidity into risk assets, including cryptocurrencies and equities.
Crypto markets responded quickly to the anticipation of dovish policy. Ethereum climbed 2% to $4,401, while other altcoins such as Solana, BNB, and Hype outperformed, with BNB and Hype reaching record highs. The rally extended to spot exchange-traded funds (ETFs), which saw significant inflows.
On September 10, Bitcoin spot ETFs recorded net inflows of $757 million, marking the third consecutive day of positive flows. Ethereum ETFs added $172 million, with BlackRock’s ETHA drawing $74.5 million alone.
Market participants have been positioning for this moment since July, when inflation data indicated easing price pressures. While hopes for a rate cut are rising, Federal Reserve officials continue to caution against excessive easing. Minutes from the last policy meeting highlighted concerns over slowing job growth, tariff-driven inflation, and elevated asset prices.
Federal Reserve Chair Jerome Powell previously noted that conditions “might justify” monetary easing, reflecting the Fed’s careful balancing act.
Recent producer price data also contributed to optimism, showing a surprising drop in August largely driven by lower service costs. This has fueled expectations that inflationary pressures are cooling. If confirmed by the CPI report, it could extend the rally across Bitcoin, Ethereum, and other Layer-1 networks, with altcoins potentially seeing sharper gains during periods of liquidity rotation.
Conversely, a stronger-than-expected CPI print could delay or limit potential rate cuts, possibly tempering the recent surge in cryptocurrencies. For now, the market is pricing in a dovish outcome, with investors betting that a Fed pivot could sustain record-breaking valuations for months ahead.
