CPI Ignites Rate Hike Expectations! Crypto Market Wipes Out Both Bulls and Bears, Nearly 100,000 People Liquidated

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Author: Zhou, ChainCatcher

The U.S. Bureau of Labor Statistics released August CPI data on Friday. Overall prices rose 3.4% year over year and 0.4% month over month, with both readings in line with market expectations. Core CPI, excluding food and energy, slowed to 2.4% year over year, the lowest level since March 2021, but rose 0.3% month over month, above the expected 0.2%. Gasoline prices rose 3.9% month over month, accounting for more than one-third of the overall monthly increase, while the energy index rose 2.1% month over month.

In equities, Asia-Pacific markets fell across the board before the data release. The Nikkei 225 closed down 1.93%, South Korea’s KOSPI closed down 1.76%, and the four major A-share indexes all opened lower and closed down. After the data was released, U.S. stocks opened higher before giving back some gains and ultimately closed higher. The S&P 500 rose 0.9%, while the Dow and Nasdaq each gained about 1%. All three major indexes still declined overall for the week.

In addition, the 10-year U.S. Treasury yield closed at 4.974%, approaching the 5% threshold, compared with 4.783% a week earlier. Brent crude closed at $104.61 per barrel that day, up more than 8% for the week. Factors including Houthi attacks on Saudi energy facilities and shipping risks in the Strait of Hormuz continued to push oil prices higher.

The crypto market first fell, then rallied, before surging and giving back gains. After the data was released, Bitcoin briefly dipped to around $76,000 before reaching a high of $79,837. On the daily chart, the 50-day moving average briefly crossed above the 200-day moving average. As expectations for interest-rate hikes rapidly intensified, prices soon retreated, and the golden cross became invalid on the same day. Ethereum briefly moved back above $2,600 intraday and showed greater elasticity than Bitcoin.

According to Coinglass data, as of press time, total liquidations across the crypto market reached $674 million over the previous 24 hours, affecting approximately 94,000 people. Ethereum liquidations led at $311 million, followed by Bitcoin liquidations at $184 million. The largest single liquidation occurred in an ETH-USD position on Hyperliquid, involving approximately $20.28 million.

Rate-hike odds rise to 80%, while suspense remains over next week’s Fed decision

For the Federal Reserve, the significance of the August CPI data had already been elevated before its release. Bank of America analysts previously said that the August jobs report was more like an appetizer, while CPI remained the main course that would truly determine the direction of the September 15–16 policy meeting. The bank believed that unless employment data produced a significant downside surprise, the jobs report was unlikely to be the final factor determining whether rates would be raised, and it maintained its call for a September rate hike. The subsequently released August jobs report showed an increase of 162,000 jobs, approximately three times expectations, moving the rate-hike discussion forward another step.

After the CPI data was released, market sentiment toward next week’s Federal Reserve meeting clearly turned hawkish. The latest Polymarket data showed that the market was pricing in an 80% probability of a 25-basis-point rate hike on September 16, a 21% probability of no change, and approximately a 1% probability of a hike of 50 basis points or more. The probabilities of contracts related to rate cuts were all below 1%. Before the CPI release, keeping rates unchanged had been the highest-probability option for a considerable period, until the rate-hike option quickly overtook it around the time of the release.

CICC Research said that August CPI had already reached the Fed’s threshold for a rate hike. It expects a 25-basis-point hike on September 16, along with a possible downward revision to the unemployment-rate forecast and an upward revision to the inflation forecast, sending a tightening signal. Financial blog ZeroHedge emphasized that core CPI was hot, supercore inflation was even hotter, and prices for education and communications services posted historic increases, with wireless communications service prices surging by a record amount.

Alexandra Wilson-Elizondo, an economist at Goldman Sachs, said that the day’s CPI data appeared to match what investors wanted to see, but increased uncertainty surrounding next week’s rate decision. In her view, the data did not fully reflect some of the inflationary pressures that had emerged recently, and there was little evidence that inflation would return to target in the short term.

Energy remains the exogenous variable in this logic. Houthi attacks on Saudi energy facilities, shipping risks in the Strait of Hormuz, and Saudi Arabia’s closure of its East-West Petroline continue to fuel supply concerns. The simultaneous presence of high oil prices and high interest rates has also led Wall Street to reframe the question as how long high rates will persist, and whether policy can contain inflation without significantly harming the economy and corporate earnings.

RBC Capital Markets has adjusted its forecast for this year from previously expecting rate cuts to expecting three rate hikes, believing that high interest rates could further pressure corporate earnings and stock valuations. In his latest article, Fed watcher Nick Timiraos said that investors had largely concluded that the Federal Reserve would deliver its first rate hike in three years next week. The more difficult question is what happens afterward.

Almost no one within the Federal Reserve believes that a single 25-basis-point hike would be enough to bring inflation down. If the Fed chooses to raise rates next week, most investors will interpret it as meaning that the previous rate level itself was misaligned, making the hike more like the beginning of a correction. The likelihood of only one hike is low. Since the 1990s, the Federal Reserve has rarely stopped after just one hike.

Waller said in July that he did not believe the Federal Reserve was good at fine-tuning. Analysts therefore concluded that a chair who is skeptical of fine-tuning would be unlikely to declare victory after a single 25-basis-point hike. The market currently expects cumulative rate hikes to reach at least three by next June, up from the previous expectation of two.

For risk assets, Friday’s rebound was primarily driven by greater clarity around the policy path, while inflationary pressures themselves have not truly been resolved. The decline in policy uncertainty may explain why U.S. stocks still closed higher even as rate-hike expectations increased. The real pricing event remains the September 16 decision, dot plot, and Waller’s press conference.

Bitcoin’s one-day golden cross, with resistance emerging at $82,000

The crypto market reacted more violently to the data. In the four hours after the CPI release, Bitcoin first dipped to $76,000, then rebounded above $79,000 before falling back to around $77,600. According to Coinglass data, total liquidations across the market during those four hours reached $471 million, including $348 million in short liquidations and $123 million in long liquidations, representing a typical liquidation of both bulls and bears.

Prominent trader Killa released statistics showing that Bitcoin had risen more than 5% within eight days after each of the last three U.S. CPI releases. He believes the current market has already priced in the negative news and that a bear-market trap has been set.

Over a longer period, the crypto market has experienced substantial volatility recently. According to Coinglass data, Bitcoin rose 24.95% in August, its best-performing month of the year so far. Momentum weakened after entering September, with the price down 1.83% for the month to date.

In terms of fund flows, spot Bitcoin and Ethereum ETFs diverged. According to SoSoValue data, spot Bitcoin ETFs recorded $463 million in net outflows for the week, with net assets of approximately $97.58 billion, corresponding to a Bitcoin price of approximately $77,286. Spot Ethereum ETFs recorded net inflows of $197 million during the same period, with net assets of approximately $16.31 billion, corresponding to a price of approximately $2,539.

Among publicly traded treasury companies, SoSoValue data showed that as of September 8 U.S. Eastern Time, the pace of Bitcoin accumulation by publicly traded companies worldwide slowed significantly last week. Excluding mining companies, total net purchases amounted to $267 million, down 48% from the previous week. Public companies collectively held 1.119973 million Bitcoin, down 2.38% from the previous week, with a market value of approximately $87.77 billion, equivalent to 5.6% of Bitcoin’s circulating market capitalization.

Strategy’s most recent purchase occurred on August 31, when it acquired 4,600 Bitcoin. Its total holdings have now reached 845,050 Bitcoin, and the position is currently showing a slight unrealized gain. According to Strategy’s latest 8-K filing, the company has raised approximately $20.9 billion this year, ranking fourth in the United States in terms of stock issuance volume, behind only SpaceX, Alphabet, and Intel. By contrast, Ethereum treasury company Bitmine continued accumulating against the trend, adding 28,086 Ethereum last week to bring its total holdings to 5.9292 million Ethereum. Its average cost is $3,347, representing an unrealized loss of approximately $5 billion at current prices.

Technically, Bitcoin briefly rose to $79,837 on September 12. The 50-day moving average briefly crossed above the 200-day moving average on the daily chart, after which prices retreated and the golden cross quickly disappeared. This was Bitcoin’s first daily golden cross since November 2025, and it also became invalid faster than any previous one, with short-term momentum cooling at the same time. Similar golden crosses appeared in 2021, February 2023, October 2024, and May 2025, and each was followed by a period of pullback. The golden cross is more of a lagging indicator, and by the time it appears, a substantial portion of the gains has often already occurred.

Regarding on-chain holder distribution, analyst Murphy noted that short-term holders’ coins are mainly distributed in the $59,000 to $81,000 range. A break above $82,000 would mean that all of these holdings had entered profit, creating an incentive for short-term capital to take profits. The largest concentration of long-term holders’ coins is also located between $81,000 and $82,000, including a considerable amount of coins held passively after becoming trapped at higher prices. As prices approach their cost basis, holders may be more likely to exit. Among whale groups holding more than 100,000 Bitcoin, there are two major concentrations near $40,000, while the remaining holdings are also clustered between $78,000 and $82,000.

Glassnode said that Bitcoin is currently constrained by long-term holder supply pressure around $83,000 to $85,000. If the newly formed concentration zone is broken, $75,000 will become a key level to watch, while a further decline could bring prices back toward the accumulation platform near $60,000.

CryptoQuant analyst Axel Adler Jr. pointed out that the proportion of Bitcoin supply currently in profit had recovered from approximately 47% at the end of June to around 69%. The 90-day change also rapidly shifted from -19% in early August to approximately 41% positive, representing one of the faster recoveries in Bitcoin’s history.

Next week’s regulatory calendar overlaps with the Federal Reserve meeting. Zach Pandl, head of research at Grayscale, said that the U.S. CLARITY Act, which aims to establish comprehensive rules for the crypto market, will face a procedural vote in the Senate on September 15 and will require 60 votes to pass. Republicans currently hold 53 seats, so further progress will require Democratic support. Even if the bill fails to pass this year, the regulatory framework for stablecoins, token issuance, tokenized securities, and perpetual futures will continue to become clearer.

Coinbase CEO Brian Armstrong said that Bitcoin reaching $400,000 by 2030 remains a reasonable target, and that he personally believes the bottom of the current cycle may already be in. He also said that regardless of the September 15 vote, the SEC and CFTC are already prepared to advance rules under their existing authority, and the industry may still gain new regulatory clarity before or after the vote.