JUST IN: August CPI Data Shows Stable Inflation at 2.9%, How Will Crypto React?

Inflation data is in, and markets are paying close attention!

The U.S. Consumer Price Index (CPI) for August 2025 rose 2.9% year-over-year, the highest since January – exactly as economists predicted. Core CPI, which removes volatile food and energy prices, stayed at 3.1%, unchanged from July and right in line with expectations.

On the surface, it’s nothing shocking. But for traders and crypto investors, these numbers are not dull. They are setting the stage for what could be a volatile few weeks ahead for Bitcoin and other risk assets.

Core Inflation Remains Stubborn

Core CPI holding steady at 3.1% shows that inflation pressures are still around. Headline CPI edged up from 2.7% in July to 2.9%, nudged higher by tariffs and rising costs.

Prices as measured by the Consumer Price Index rose 2.9% over 12 months ending in August, the Bureau of Labor Statistics reported. Monthly CPI rose 0.4%, slightly above expectations, while core monthly CPI was steady at 0.3%.

For crypto, this matters. Persistent inflation could slow the pace of Fed rate cuts, keeping more speculative assets under pressure.

All Eyes on the Fed

The big question now: how will the Federal Reserve respond? Markets expect a 25 basis point cut at the September 17 FOMC meeting. Some traders are even betting on a larger 50bps “insurance cut,” thanks to weaker-than-expected labor numbers.

A recent revision showed the U.S. created 911,000 fewer jobs through March 2025 than previously reported – the biggest adjustment since 2009. That makes the Fed’s decision a tricky one, balancing sticky inflation with a softer labor market.

Bitcoin Reacts

Bitcoin is already moving but the impact may not be immense. 

Traders are watching Fed signals closely – a rate cut is most likely to boost the market even though some argue it would be short lived. 

And crypto isn’t alone in watching inflation and Fed moves. Gold has hit record highs this week, signaling demand for alternative assets. Treasury yields are expected to steepen, adding another layer to market volatility.

For Bitcoin and investors, the next few weeks could be decisive. CPI matched expectations, but core inflation is holding firm. The stage is set for a tense, high-stakes period for crypto.