TLDR
- CPI will be released Friday for the first time since 2018 amid a shutdown.
- A CPI reading above 3.1% could delay the Fed’s expected rate cut.
- Bitcoin surged over 3% ahead of CPI data and the October Fed meeting.
- The crypto market cap is now at $3.71 trillion with rising trading volumes.
This Friday’s release of the U.S. Consumer Price Index (CPI) comes at a key moment for crypto markets and the Federal Reserve. With the government partially shut down and the Federal Open Market Committee (FOMC) meeting just five days away, investors are watching closely. The CPI release could shape the Fed’s next rate decision and cause new volatility across digital assets and traditional markets alike.
Rare Friday CPI Report Ahead of FOMC Meeting
The Bureau of Labor Statistics will release the September CPI on Friday at 8:30 a.m. ET. This is the first Friday CPI release since January 2018. It is also taking place during a government shutdown, which has already delayed other economic data.
Despite the shutdown, the Department of Labor confirmed it would recall staff to publish the CPI report. No other key reports will be released until the shutdown ends, leaving the CPI as the primary guide for markets before the October 28–29 FOMC meeting.
The CPI data is being closely watched because the Fed is in a blackout period, with no new guidance from officials before the meeting. The Fed Chair Jerome Powell has already suggested a possible 25-basis-point rate cut, but stronger-than-expected inflation could shift that view.
CPI Data and Fed Rate Cut Expectations
August’s CPI showed a monthly increase of 0.4% and a year-over-year rise to 2.9%, up from 2.7% in July. Analysts say a CPI reading of 3.1% or higher could make the Fed reconsider a rate cut. If inflation is lower than expected, the Fed may move ahead with its plan to reduce rates.
Markets are already pricing in rate cuts. According to the CME FedWatch Tool, there is a strong chance of a 50-basis-point cut by the end of the year. However, with economic data limited due to the shutdown, this week’s CPI report carries extra weight.
The unusual timing of the report just before the FOMC meeting and the lack of other key data makes it a key signal for the Fed. Market participants will likely adjust their positions quickly based on the release.
Crypto Market Response to Economic Uncertainty
The total crypto market capitalization stands at $3.71 trillion, and prices have moved higher this week. Bitcoin rose over 3%, trading near $111,000. Ethereum rebounded above $4,000, while BNB and XRP both saw gains over 3%.
Trading volume has surged, with Coinglass data showing increased activity in derivatives markets. Analysts note that a short squeeze in Bitcoin may be underway, as traders bet on further gains.
Ted Pillows, a market analyst, said, “The next level to watch is $112,000. If Bitcoin breaks that, momentum could build further.”
The crypto market often reacts quickly to macroeconomic news. Investors are betting that easing inflation and Fed rate cuts will support higher prices in the near term.
Geopolitical Context Adds to Market Volatility
Ongoing U.S.-China trade talks have also influenced crypto and global markets. Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng are scheduled to meet this week. This could lead to progress ahead of a possible meeting between Donald Trump and Xi Jinping.
Gold prices fell from an all-time high of $4,375 as tensions between the two countries appeared to ease. Investors are watching whether continued diplomacy could support further gains in crypto and other risk assets.
At the same time, credit stress is rising in the banking sector. Reports of bad loans from Western Alliance and Zions have added to investor caution. Strike CEO Jack Mallers said the current environment could lead to renewed interest in Bitcoin as a store of value.
