Crypto Rebound Pushes Market Toward $2.7 Trillion as Fed Hike Bets Hold

Cryptocurrency markets mounted a broad-based recovery on Friday, pushing aggregate digital asset market capitalization back toward $2.7 trillion as traders absorbed mixed U.S. inflation data before the Federal Reserve’s upcoming interest rate decision. U.S.-listed spot Bitcoin exchange-traded funds, however, recorded approximately $330.5 million in net daily outflows.

The Labor Department’s August Consumer Price Index triggered a brief intraday selloff. According to data released Friday by the Bureau of Labor Statistics, headline CPI advanced 0.4% from the prior month and 3.4% year over year, matching consensus forecasts and the annual rate recorded in July.

Bitcoin reversed an early slide to an intraday low of $76,040 recorded immediately after the CPI release. The largest cryptocurrency later climbed as high as $79,837 before stabilizing near $79,007, a 3.24% gain from its opening level of $76,529.

Core CPI, which excludes volatile food and energy costs, slowed to 2.4% year over year from 2.5% in July. That was its tamest annual reading since 2021, although the monthly core index increased 0.3%, exceeding the 0.2% rise anticipated by Wall Street economists.

The sticky monthly reading followed Thursday’s hotter-than-expected Producer Price Index and reinforced concerns over persistent service-sector inflation. The inflation print was the final major economic data release before the Federal Open Market Committee’s September 15–16 monetary policy meeting.

Interest rate futures tracked by the CME FedWatch Tool indicate an approximate 69% probability that the central bank will raise the federal funds rate by 25 basis points at the conclusion of the meeting on Wednesday at 2:00 p.m. ET. Polymarket prices the likelihood of a 25-basis-point rate hike at 62%, while Myriad lists the probability at 61%.

The policy backdrop follows a July FOMC session in which three regional Federal Reserve bank presidents dissented in favor of an immediate rate increase. Fed Chair Kevin Warsh reiterated during his Jackson Hole symposium address that monetary authorities still have “work to do” to steer inflation sustainably toward the 2% target.

Ethereum climbed 7.48% to reclaim the $2,611 mark, and Solana advanced 4.53% to cross back above $100. Privacy-focused cryptocurrency Zcash posted a 4.71% daily gain, extending its seven-day rally to 23.09%.

The Crypto Fear & Greed Index surged 17 points to 73, entering “greed” territory after dropping to 56 following Thursday’s producer price data. The Altcoin Season Index registered at 38, signaling that capital concentration remains largely centered within Bitcoin rather than rotating broadly into smaller-cap tokens.

Aggregate open interest across crypto futures contracts climbed 1.52% to $429.99 billion. Twenty-four-hour trading volume reached 877.11 billion dollar, representing a 2.27% increase, while the rapid price reversal caused $897.09 million in total liquidation across derivatives exchanges.

Liquidated positions included $493.85 million in long positions and $403.24 million in wiped-out short bets. Despite the prospect of borrowing costs remaining elevated, digital assets largely shrugged off macro headwinds as the trading session progressed.

On Bitcoin’s daily chart, the 50-day exponential moving average moved above its 200-day exponential moving average, forming an initial golden cross pattern that market technicians view as an indicator of medium-term bullish trend continuation. The Relative Strength Index stood at 59.7, below the 70 threshold that signals overbought market conditions.

The Average Directional Index tracked in the 40s, well above the baseline level of 25 that indicates a defined trend. The positive directional indicator (+DI) remained above the negative indicator (-DI).

Technical analysts identify Bitcoin support in the Fibonacci retracement range between $73,986 and $75,569, measured from the summer low of $68,858 to the late-August peak of $82,281. Buyers face immediate overhead resistance at the late-August high of $82,281 ahead of the Fed’s rate announcement.