Bitcoin surged past $116,000 on Friday, buoyed by new U.S. inflation data that heightened expectations of an interest rate cut by the Federal Reserve. This spike was accompanied by a 2.5% rise in Ether, bringing its price to $4,519, and increasing the overall cryptocurrency market to $4.1 trillion, marking a 1.5% increase.
The recent market rally follows a series of closely monitored economic reports that have shifted market sentiment significantly. Earlier in the week, fresh data from the Producer Price Index (PPI) revealed a surprising 0.1% decline in wholesale inflation, contrary to forecasts predicting a 0.3% increase. Subsequently, consumer price index figures indicated a rise in headline inflation; however, it remained insufficient to thwart projections of imminent monetary easing.
Compounding this situation, the Bureau of Labor Statistics released a downward revision of employment data for the 12 months ending in March 2025, reducing the job count by approximately 900,000. This adjustment nearly cut the previous jobs estimate in half, suggesting a labor market that is weaker than initially assumed.
Greg Magadini, director of derivatives at Amberdata, articulated that the combination of stable inflation figures and significant downward revisions to employment data is steering the Federal Reserve’s focus from price stability toward promoting economic growth. “This is greatly helping shift the narrative of the Fed away from inflation towards cutting rates to support the labor market,” he explained. He suggested that the likelihood of a 50-basis-point rate cut in the upcoming meetings has increased.
As risk assets experienced a rally—from Bitcoin to gold—investors seem to be preemptively positioning themselves ahead of what they predict will be a crucial move by the Fed. Gadi Chait, investment manager at Xapo Bank, highlighted Bitcoin’s recent resilience, noting it climbed 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 remarked.
Further supporting this sentiment, the latest jobless claims report indicated an increase to 263,000, further affirming the anticipation of a rate cut in September. Investors are keenly watching for indications of how the Fed will balance persistent inflation with softening growth.
The appetite for institutional investments remains robust, exemplified on September 11, when spot Bitcoin ETFs saw a remarkable $553 million in net inflows, marking four consecutive days of gains. Meanwhile, Ethereum spot ETFs contributed an additional $113 million, extending their winning streak to three days.
Regardless of whether the Fed decides on a quarter- or half-point cut, Bitcoin continues to draw significant capital inflows. Its emerging role in investment portfolios is being recognized more widely, as allocators increasingly view it as a unique asset that can provide protection against various economic scenarios.
