CPI Data Preview: Fed Rate Cut Odds and Potential Impact on Bitcoin, Ethereum and Altcoin Markets

On September 11, 2025, the United States will release the August CPI data, a key indicator shaping the Federal Reserve’s interest rate decision at its September 16–17 FOMC meeting.

This article reviews CPI expectations, recent macroeconomic signals, and how different rate cut scenarios could affect Bitcoin and the broader crypto market.

CPI Expectations and Fed Rate Cut Probabilities

Markets expect August CPI to rise to 2.9% year-over-year, up from July’s 2.7%. Core CPI, which excludes food and energy, is projected at 3.0%.

If the figures meet or fall below these estimates, it would reinforce signs of cooling inflation, increasing the likelihood of a Federal Reserve rate cut next week.

Market data shows a 96% probability of a cut, with an 82% chance of a 25 basis point (bps) move. JPMorgan expects the same, despite uncertainties in the Consumer Price Index.

Rate cut expectations typically support liquidity conditions, and in similar past environments, Bitcoin has experienced short-term volatility. BTC is consolidating around 111,000 dollars, and if inflation prints lower than expected, the market could rebound, similar to past reactions following soft inflation data.

However, if CPI exceeds forecasts, for example with a monthly increase above 0.3%, markets could retreat and BTC may come under pressure.

A crypto trading expert Ex-Insider wrote on X: “Volatility this week is almost guaranteed.”

From Weak Jobs Data to CPI: Broader Macro Signals

The latest labor market data signaled a clear slowdown, as evidenced by two key indicators:

• Only 2.2K jobs were added in the non-farm payrolls report last week

• The unemployment rate increased to 4.3%

Both figures came in weaker than market expectations.

Source: https://x.com/XInsiderCrypto/status/1964846319471931419

The PPI to be released on September 10 serves as a leading inflation indicator. Markets treat it as the appetizer before Thursday's main course. The implications could be twofold:

• A cooler PPI would hint at softer CPI tomorrow

• A hotter PPI could amplify inflation concerns

Tomorrow’s CPI reading will provide confirmation. If inflation eases further, the Fed may prioritize stimulus, making a September rate cut almost certain.

Markets currently expect two to three cuts in total for the year, amounting to around 75 bps, echoing Queens' College, Cambridge University President Mohamed A. El-Erian's view.

Historically, September has been a cautionary month for both Wall Street and crypto traders, with altcoins typically seeing negative returns of 5-7%. However, rate cut cycles have historically coincided with expansions in crypto market capitalization, which could lift the current level of about four trillion dollars.

Looking ahead to Q4, the outlook appears more optimistic:

• November and December traditionally rank among the best-performing months

• A potential US stock market rally in Q4 could fuel crypto market gains

• Liquidity-sensitive sectors such as DeFi and meme coins may react particularly strongly

At the same time, the European Central Bank will announce its rate decision tomorrow. A pause in tightening could weaken the dollar and support risk assets such as BTC, while a hawkish stance might restrict global liquidity.

Polymarket Odds and Crypto Market Scenarios

Polymarket data shows the probability distribution for the Fed’s September rate decision as follows.

If CPI comes in higher than expected, the odds of no cut may increase, while softer data would strengthen the case for larger cuts.

• 25 bps Cut (around 82%): The consensus scenario, which may prompt a moderate rebound, as markets tend to gradually price in rate cut expectations before the actual announcement, suggesting modest gains post-release. Historical data shows BTC rising 3 to 7%, ETH benefiting from lower funding costs, and altcoins moving 5 to 10%.

• 50 bps or More Cut (around 14%): Aggressive cuts have historically driven stronger inflows, with BTC gains of 8 to 15%, ETH on-chain activity increasing, and altcoins surging 10 to 25%.

• No Cut (around 4%): This outcome would likely strengthen the U.S. dollar, driving crypto market sell-offs. BTC could see 5 to 10 percent short-term declines, ETH liquidity would tighten, and altcoins could face sharper drops.

The CPI release will determine these probabilities and directly shape the Fed’s September decision. Historical patterns suggest that during rate cut cycles, altcoins often outperform BTC and ETH in relative terms.