A softer U.S. inflation reading is bolstering expectations of further Federal Reserve rate cuts and giving risk assets, including Bitcoin, a short-term tailwind, according to analysts.
The September CPI print came in slightly below forecasts, signalling that disinflation remains intact and strengthening the Fed’s case to maintain a gradual easing path.
Speaking with Yellow.com, Bitfinex analysts said the numbers “signal continued disinflation despite persistent shelter and services prices,” noting that Treasury yields eased and the dollar slipped as markets priced in a higher probability of another rate cut before year-end.
“For Bitcoin and broader digital assets, the print validates the recent consolidation as part of an ongoing correction phase rather than a top,” the analysts added, suggesting ETF inflows could pick up if yields continue to soften.
David Siemer, CEO of Wave Digital Assets, said inflation that is “elevated but not accelerating” gives crypto markets “some positive momentum after a period of volatility.” He noted that a weaker dollar and a dovish Fed outlook tend to boost digital assets such as Bitcoin and Ethereum, even if traders remain cautious.
“The market isn’t in full-throttle rally mode yet,” Siemer said. “Traders are taking incremental exposure, not betting on a straight run. If we see clear signs of rate cuts and sustained inflows, we could look at a meaningful move upward heading into year-end.”
Kyle Chassé, founder of MV Global, echoed that view, calling the softer CPI a relief for risk assets.
“In a lower-rate world, the carrying cost of Bitcoin drops, while ETFs keep acting as the steady bid pulling coins off the market,” he said.
Still, Chassé warned that “core prices running hot, import costs creeping higher, and a firm dollar can still bite,” adding that the Fed will likely need “a few more soft prints and cooler jobs data before declaring victory.”
The Bureau of Labor Statistics reported headline inflation at 2.7% year-on-year, below the 2.8% estimate, while core inflation rose 2.9% versus 3.0% expected.
Both measures increased 0.2% month-on-month, the slowest pace in three months, with shelter costs showing the smallest rise since early 2021. The data, delayed by the government shutdown, has reinforced investor expectations that the Fed could follow next week’s widely anticipated cut with another in December.
With Treasury yields slipping and the dollar easing, analysts say the environment now favors both equities and digital assets, particularly if disinflation persists through the next round of economic data.
