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%.
