Why Bitcoin Barely Moved Even as US Inflation Cools to 3.4%

U.S. inflation in July slowed as expected, and markets—including Bitcoin—took it in stride.

The Consumer Price Index, or CPI, increased by 0.1% over the last month after falling 0.4% in June, in line with forecasts, the Bureau of Labor Statistics reported Wednesday.

“Over the last 12 months, the all items index increased 3.4 percent before seasonal adjustment,” the Bureau said.

Shelter did most of the work. “The index for shelter rose 0.1 percent in July, accounting for roughly two-thirds of the monthly all items increase,” the Bureau said. Energy pulled the other way, dropping 1.5% as gasoline got cheaper. Strip out food and energy and prices still rose 0.2% in July after stalling in June, and 2.5% over the year—the gauge the Federal Reserve watches most closely.

Here’s the chain traders watch. Cooler inflation is, in principle, a dovish signal: it nudges the Federal Reserve toward lower rates, which makes risky assets like Bitcoin more attractive. So a soft CPI usually lifts crypto.

It didn’t this time. Markets priced in this outcome weeks ago.

Bitcoin’s reaction candle was a sliver: up about $209, or 0.33%, to roughly $63,750, with a daily range of just 1.5%. Total crypto market cap nudged from $2.19 trillion to $2.17 trillion, a 0.9% dip. Both charts show the same thing: a market that shrugged.

Why the relief was already priced

The number wasn’t a surprise that rewrote the Fed’s plans. It landed just where economists expected. At 3.4%, inflation still sits well above the central bank’s 2% target, and a tame print didn’t open the door to easing because the door was never close to opening.

Investors had also moved early. Spot Bitcoin ETFs pulled in roughly $854 million over five straight sessions last week as rate-hike bets faded, their strongest run since May. The relief trade was already on the books before CPI landed.

Besides that, the tape was too weak to break out. Bitcoin is pinned between about $62,000 support and $67,000 resistance, trading under $65,000 since a brutal early-August selloff. Its 50-day average sits below its 200-day average, a bearish signal, and trend strength continues to be weak.

On the Myriad prediction market, operated by Decrypt‘s parent company Dastan, traders were lagely unmoved by the CPI print as well. At the moment, markets believe Bitcoin is much more likely to continue its downward slide toward $55K than upward to $84k. Markets are also pricing in only 17% odds that Bitcoin touches $70K this month at all.

Bitcoin already got one macro excuse to run last week, when a weak jobs report pointed to a dovish Fed, and it didn’t take it. So it’s little surprise it did the same on this latest macro indicator.

The all-items index came in at 3.4% for the 12 months ending July — more than a point above the Fed’s 2% target.