Bitcoin briefly rose above $116,000 on Friday after fresh US inflation data fueled expectations of a Fed Reserve interest rate cut, lifting risk assets across the board.
Ether rose 2.5% to $4,519, while the overall crypto market added 1.5% to $4.1 trillion. The gains followed a week of closely watched economic releases that reinforced a shift in market sentiment.
Producer price index data earlier this week showed wholesale inflation unexpectedly declined 0.1%, against forecasts for a 0.3% increase.
That was followed by consumer price index figures, which confirmed headline inflation had quickened but not enough to derail bets on imminent monetary easing.
At the same time, the Bureau of Labor Statistics revised down employment data for the 12 months through March 2025, erasing about 900,000 jobs. The adjustment, nearly halving the previous count, signaled that the labour market is weaker than previously thought.
Greg Magadini, director of derivatives at Amberdata, said the combination of steady inflation numbers and large downward revisions to employment was pushing the Fed away from a focus on price stability toward supporting growth.
“This is greatly helping shift the narrative of the Fed away from inflation towards cutting rates to support the labor market,” he said.
He added that this tilt increased the likelihood of a 50-basis-point rate cut either next week or at the October policy meeting.
Risk assets from Bitcoin to gold rallied in response, front-loading the impact of the expected easing. Investors interpreted the shift as an opportunity to position ahead of a decisive Fed move.
Gadi Chait, investment manager at Xapo Bank, noted that Bitcoin had already shown resilience, climbing to $114,000 earlier in the week.
“This divergence between sticky inflation and weakening employment creates an almost ideal backdrop for Bitcoin, as investors seek protection against both currency debasement risks and macroeconomic uncertainty,” he said.
Weekly jobless claims rising to 263,000 reinforced that view, keeping a September cut firmly in play. Markets now anticipate the Fed will act quickly, balancing stubborn inflation with signs of softening growth.
Institutional appetite showed through once again on Sept. 11, when spot Bitcoin ETFs drew $553m in net inflows, the fourth straight day of gains. Ethereum spot ETFs added another $113m, extending their own streak to three days.
Whether the Fed opts for a quarter- or half-point cut, Bitcoin continues to attract capital. Its role in portfolios is expanding, with allocators seeing it as a unique asset that offers protection across multiple scenarios.
