Bitcoin rose on Thursday morning, breaking above $114,000, supported by weaker-than-expected US inflation data and stronger institutional inflows into spot exchange-traded funds (Spot ETFs).

The cryptocurrency jumped after the US Producer Price Index (PPI) showed wholesale inflation slowing in August, with prices down 0.1% month-on-month and easing to 2.6% year-on-year. This unexpected drop in PPI opened the door for risk assets, pushing Bitcoin firmly through the $113,000 level.

According to CoinGecko data, Bitcoin was trading at $114,100 at the time of writing, up more than 2% on Thursday.

The broader cryptocurrency market also advanced, with total market capitalization rising 1.5% to $4.06 trillion.

Ethereum (ETH-USD) followed Bitcoin higher, trading above $4,440 in early dealings, supported by investor appetite for ETFs and on-chain accumulation.

Timothy Messer, Head of Research at BRN, said: “The downside PPI surprise was a clear catalyst, sending Bitcoin to $114,000 and accelerating institutional inflows. The market is now at a crossroads: if CPI comes in weaker than expected, momentum is likely to continue with volatility compressing. But if CPI surprises to the upside, rapid risk-off moves will follow.”

Institutional flows into spot Bitcoin ETFs highlighted this sentiment shift. Bitcoin funds attracted $757 million in net inflows on September 10, marking a third consecutive day of gains, according to BRN data.

Ethereum funds also saw $172 million in inflows, while blockchain infrastructure firm Bitmine added 46,255 ETH (worth about $201 million) to its holdings, bringing its total to more than 2.1 million ETH ($9.24 billion).

In derivatives markets, traders showed greater risk appetite. Open interest in Bitcoin futures climbed to $84.86 billion, while forced liquidations fell to $37.96 million, mostly from short sellers. Total futures trading volume rose to about $53 billion, reflecting strong participation from both traditional investors and leveraged traders.

Focus on US CPI Data

Traders are now eyeing the US consumer price index (CPI) release on Thursday to test momentum. A second weak inflation print could reinforce bets on three Fed rate cuts between now and year-end. A stronger-than-expected reading, however, could flip Bitcoin ETF flows negative and renew pressure on risk assets.

Fed Decision Looms

Further deterioration in July and August labor market data has left the Fed under pressure to cut rates, while core inflation remains above 3%, conflicting with the central bank’s dual mandate.

As a result, investors expect the Fed to stimulate the economy with a larger-than-expected rate cut. While markets have already priced in a quarter-point cut, speculators are betting on a half-point move, which may explain the strong ETF inflows into Bitcoin, according to Stephen Gregory, founder of trading platform Vtrader.

The CME FedWatch tool shows a 92% probability of a 25-basis-point cut, versus just 8% for a 50-basis-point move. On Myriad, the prediction platform run by DASTAN (parent company of Decrypt), users put the probability of a 25-basis-point cut at 80%.

Oil prices fell on Thursday as concerns over slowing demand in the United States and the risk of global oversupply offset anxiety about attacks in the Middle East and the ongoing Russia-Ukraine war.

Brent crude futures fell 21 cents, or 0.3%, to $67.28 a barrel by 09:11 GMT, while US West Texas Intermediate crude declined 26 cents, or 0.4%, to $63.41 a barrel.

Benchmark contracts had risen by more than $1 each on Wednesday after Israel’s attack on Hamas leadership in Qatar the previous day, along with Poland and NATO deploying air defenses to shoot down suspected Russian drones that entered Polish airspace during an assault on western Ukraine.

However, the International Energy Agency said in its monthly report that global oil supply will rise faster than expected this year, with output increasing from OPEC+ countries as well as non-member producers, while demand growth remains limited.

Tamas Varga, analyst at PVM Oil Associates, said: “Our market is torn between a perceived supply shortage due to escalating tensions in the Middle East and Ukraine, and an actual surplus reflected by OPEC+ production increases and rising inventories in the US weekly and monthly energy reports.”

He added that uncertainty over secondary sanctions on Russian oil buyers, such as China and India, is providing a price floor, but he expects prices to resume their decline once geopolitical tensions ease.

US Energy Information Administration data showed crude inventories rose by 3.9 million barrels in the week ending September 5, compared with expectations for a 1 million-barrel decline.

Meanwhile, weakness in the US economy has fueled expectations that the Federal Reserve may cut interest rates next week. Tony Sycamore, analyst at IG Markets, said: “Traders are taking a more cautious stance ahead of today’s US CPI report, as deeper Fed rate cuts are already priced in, and a stronger-than-expected CPI could upset those assumptions.”

OPEC+, which includes the Organization of the Petroleum Exporting Countries and its allies, decided on Sunday to increase production starting in October. OPEC is scheduled to release its monthly oil market report later on Thursday.

The US dollar held steady on Thursday as investors awaited US consumer inflation data for clearer signals on the Federal Reserve’s rate-cut path, while the euro remained unchanged ahead of the European Central Bank meeting.

Michalis Rousakis, G10 FX strategist at Bank of America, said: “The main event is the US CPI data… the market is looking for justification to reprice Fed expectations toward a larger cut, which could push the dollar lower.”

He added that the question is whether the Fed can be repriced for more easing, “given that markets are already pricing in a cut in September, and nearly three cuts by year-end.” He explained that Bank of America’s baseline expectation is for two additional cuts this year.

The dollar index rose 0.1% to 97.91, with the US currency largely stable against major counterparts.

This came after data on Wednesday showed an unexpected decline in US producer prices, strengthening expectations of a Fed rate cut next week. It followed Tuesday’s revision to payroll figures, which revealed the US created 911,000 fewer jobs in the 12 months through March than previously estimated.

In Europe, the ECB is expected to keep rates unchanged at its meeting later today. The euro was steady at $1.169225 before the decision. Analysts said policymakers may adopt a more dovish tone to address trade and political uncertainty across the continent.

The single currency stabilized after two days of losses, while geopolitical tensions on the EU’s eastern flank continued. Poland said Wednesday it shot down suspected Russian drones in its airspace with NATO support — the first known instance of a NATO member using direct military force since the Russia-Ukraine war began.

In a note, Commerzbank analysts said hopes that the ECB meeting might spark a bigger EUR/USD move could be disappointed, given the lack of expected new information. They added: “If there are any hopes, they may rest with ECB President Christine Lagarde, who appeared surprisingly hawkish in her last two press conferences.”

But they emphasized that with no rate cut expected until June next year, Lagarde is unlikely to reveal her stance at this early stage.

Focus on the Fed

Market attention remains centered on the Fed’s easing path. Investors view rate cuts as a given, but the question remains: how large?

According to the CME FedWatch tool, traders price an 8.9% chance of a larger 50-basis-point cut at the September 16–17 meeting, while a 25-basis-point cut is fully guaranteed.

At the same time, the Fed’s policymaking committee has remained in focus, after the Trump administration on Wednesday moved to appeal a court ruling that temporarily blocked his unprecedented attempt to dismiss Fed Governor Lisa Cook. The White House seeks to remove her ahead of next week’s meeting.

Meanwhile, Stephen Miran moved a step closer to joining the Fed Board of Governors, part of Trump’s efforts to expand his direct influence over monetary policy. The Senate Banking Committee voted to advance his nomination, although lawmakers noted it remains uncertain whether the process will be completed in time for him to participate in the upcoming meeting.

Other Currencies

The dollar rose 0.2% to ¥147.80 after data showed Japan’s wholesale prices increased 2.7% year-on-year in August, accelerating from the previous month and reflecting continued inflationary pressures in the world’s fourth-largest economy.

The Australian dollar fell 0.1% to $0.66095, retreating after hitting its highest since November on Wednesday as commodity prices, including oil and gold, weakened.

The offshore yuan traded at 7.1216 per dollar, up 0.04%. The New Zealand dollar dropped 0.2% to $0.59290, while sterling slipped 0.1% to $1.35195.

Gold prices fell in the European market on Thursday, moving away from all-time highs, as correction and profit-taking activity intensified, in addition to pressure from the stronger US dollar in the foreign exchange market.

Weak US producer price data boosted expectations of a Federal Reserve rate cut next week. For further clarity, investors are awaiting consumer price data later today, considered the main gauge of US inflation.

Price Overview

• Gold prices today: Gold fell by 0.5% to ($3,621.62), from the opening level at ($3,640.59), recording the highest at ($3,649.21).

• At Wednesday’s settlement, gold prices rose by 0.4%, resuming gains that had paused the day before amid correction and profit-taking from the all-time high of $3,674.80 per ounce.

US Dollar

The dollar index rose by about 0.2% on Thursday, extending gains for the third consecutive session, reflecting the continued advance of the US currency against a basket of major and minor counterparts.

As we know, the stronger US dollar makes dollar-priced bullion less attractive to buyers holding other currencies.

US Interest Rates

• US producer price data for August came in weaker than market forecasts on an annual basis and unexpectedly contracted on a monthly basis, signaling a potential slowdown in consumer prices during September.

• According to the CME FedWatch tool: the probability of a 25-basis-point rate cut in September is currently priced at 100%, with an 8% chance of a 50-basis-point cut.

• The probability of a 25-basis-point cut in October is also fully priced at 100%, with a 6% chance of a 50-basis-point cut.

US Inflation Data

To reaffirm these odds, traders are awaiting key US inflation data for August later today, which are expected to heavily influence the Fed’s policy path.

At 12:30 GMT, the headline consumer price index (CPI) will be released, expected to rise by 2.9% year-on-year in August from 2.7% in July. Core CPI is expected to increase by 3.1% year-on-year, unchanged from the previous reading.

Gold Outlook

• Ilya Spivak, financial markets strategist, said: “Gold appears to be holding on to recent gains as markets await the US CPI report and its impact on Fed rate cut expectations.”

• Spivak added: “The current trend for gold prices points upward, but a strong CPI report could strengthen the dollar and hurt gold in the short term, pushing it lower.”

• He explained: “Losses may be limited, as markets are unlikely to abandon their rate-cut bets even if easing is delayed somewhat.”

SPDR Fund

Gold holdings at SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose by about 0.28 metric tons yesterday, bringing the total to 979.96 metric tons, rebounding from 979.68 metric tons, the lowest since August 29.