US inflation held at 3.4% in July, matching Wall Street forecasts, while core prices cooled to 2.5%. The in-line report keeps a September Federal Reserve rate hike a live coin flip for Bitcoin (BTC) traders.

The Bureau of Labor Statistics published the data on Wednesday. Rate futures now split almost evenly between a hold and a quarter-point increase at the September 16 meeting.

U.S. CPI: +3.4% YEAR-OVER-YEAR (EST. +3.4%)
U.S. CORE CPI: +2.5% YEAR-OVER-YEAR (EST. +2.5%)

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Headline prices rose 0.1% on the month, reversing June’s 0.4% decline. That June drop was the steepest since April 2020, driven largely by falling energy costs. The annual rate eased from 3.5% to 3.4%.

Core CPI, which strips out volatile food and energy costs, climbed 0.2% in July and 2.5% from a year earlier. Both readings matched the consensus in the BLS report, and annual core inflation slowed from June’s 2.6%.

The result even disappointed the optimists. Traders on Kalshi, a regulated prediction market, had leaned toward a softer 3.3% print before the release. As BeInCrypto’s July CPI preview noted, markets treated this report as the week’s biggest macro test.

CME FedWatch data put the probability of a September hold at 54.1% just before the release, against 45.9% for a quarter-point hike. One week earlier, futures leaned the other way and priced a 54.4% chance of tightening. Post CPI release, the odds shifted.

The reversal traces back to the weak July jobs report, which showed payrolls shrinking by 23,000 against forecasts for an 80,000 gain. Cooling employment argues for patience, while above-target inflation argues for action.

Fed Chair Kevin Warsh has kept the target range at 3.50% to 3.75% since taking office in May, despite pressure from President Trump to lower borrowing costs. Three policymakers dissented at the July meeting and voted for a hike, a hawkish tilt that bond traders had endorsed.

Wednesday’s print settles none of that debate. It hands doves no fresh ammunition and gives hawks no new alarm.

BTC traded near $64,039 shortly after the release, down 0.2% over 24 hours, according to BeInCrypto Markets data. The muted move mirrors the data itself, which removed the risk of a hot surprise without strengthening the case for easier policy.

Derivatives desks read the calm differently. In commentary shared with BeInCrypto, Andrei Grachev, Managing Partner at crypto market maker DWF Labs, argued the in-line print resolves little after Friday’s payrolls miss.

“The more interesting detail is that the options market is still charging a material premium for protection. On the end-August expiry, downside strikes near $60,000 have been costing more than equivalent upside strikes near $70,000. That gap has persisted through quiet data, which points to caution about the broader policy path rather than any single print.”

Grachev added that traders have rebuilt upside exposure at $70,000 even as the pricing stays defensive. In his view, that leaves positioning constructive but hedged, with Thursday’s producer price data the next test of whether the protection premium eases.

Fabian Dori, Chief Investment Officer at Swiss digital asset bank Sygnum, took a calmer view, arguing the data points to gradual cooling without a recession scare or a fresh hawkish repricing.

“September rate odds should stay roughly stable, leaving the macro backdrop for risk assets largely unchanged. If energy prices continue to ease, the combination remains constructive for digital assets without needing a policy pivot,” Dori told BeInCrypto.

The Sygnum executive pointed to Treasury cash balances, bank leverage rules, private credit creation, and stablecoin adoption as the liquidity forces that matter more over the medium term.

Iggy Ioppe, Chief Investment Officer at digital asset manager Theo, went a step further, saying the report neither forces a hike nor hands markets a clean dovish catalyst.

“Policy remains easier than the combination of inflation and labor-market readings justifies, so every day of inaction continues to function as effective easing…” Ioppe said in a statement to BeInCrypto.

He added that Bitcoin’s price action has stayed more contained than returning institutional ETF flows would suggest, with gold serving as the ballast while energy and policy uncertainty stay elevated.

The August jobs report and core PCE inflation also land before the September 16 decision. If those readings echo July’s calm, the case for holding rates strengthens and Bitcoin’s macro backdrop stays steady. However, any reacceleration would revive hike bets and put crypto’s resilience back on trial.

The post US Inflation Holds at 3.4%: Will Bitcoin Dodge a September Fed Hike? appeared first on BeInCrypto.

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