The most important economic data released on Thursday shows that the US economy can be on the verge of stagflation, a challenging mix of sluggish growth, a weakened labor market and rising prices.
Despite these concerns, Crypto market participants remain optimistic and instead focus on expected cuts and signals with federal reserve from traditional markets such as drivers for higher crypto values.
“The underlying driving force for this market cycle is a monetary headwind, and it remains intact, despite the risk of stagflation. Bitcoin and crypto more broadly absorb capital as a hedge of Fiat-dilution and long-term fiscal instability. Supports, a creep, like a creep that is advised Coindesk.
Data released on Thursday showed that consumer prices rose 0.4% month to month in August and ran the annual inflation rate to 2.9% the highest since January. It rose from 2.7% in July. Meanwhile, first -time unemployment support applications rose last week to their highest level of four years. Early this week, BLS announced a record downward revision of jobs created during the year ending March 2025.
Despite the suspected stagflationary data, the S&P 500 rose to new high times, while the dollar index fell by 0.5% to 97.50, as the traders focused on expected cuts in bold rate and looked beyond inflation’s concerns.
Bitcoin The leading cryptocurrency with market value, topped cards to $ 116,000 and is based on the recent bullish technical outbreak. From the time of writing, BTC traded for $ 115,244. Altcoins like solans’ sun (Sun)Link (CONNECTION)Dogecoin Submitted larger gains on a 24-hour basis.
Dealers expect widely that Fed will reduce the rates by 25 basic points to 4% on September 17, with additional reductions expected through the end of the year. This view remains largely unchanged despite Thursday’s disappointing financial data, which signalizes continued confidence that Fed will prioritize supporting the labor market and seeing past concerns about sticky inflation.
Le Shi, CEO of Crypto Market Maker Auros, made an interesting observation that the magnificent 7 coin-large CAP technological stocks known for their market dominance and strong growth potential-pre-defenders relatively isolated from stagflation fears. The continued strength of the so-called MAG 7 coins that have planned billions in capital costs and research and development (F&U) Expenses for AI could lubricate the mood of the crypto.
“On Stagflation, which is a threatening threat to the current Bull Run, MAG 7 and S&P 493 have significantly decoupled too late. As a result, the AI narrative – arguably the biggest theme of this bull race so far – has more isolated from Stagflation’s fears because of this,” added Shi.
Sam Gaer, Chief Investment Officer for Monarq Asset Management’s Directional Fund, stated that the risk-rewarding relationship in the cryptocurrency market remains attractive.
“Dealers seem to get an ‘all ready’ for a bet cut next week after CPI and work data did not provide shock or negative surprises. With these releases behind us-and after yesterday’s softer than expected PPI printing, we are mening that risk/reward continues to favor the upside,”
Gaer explained that Fed in a potential stagflationary scenario may be forced to prioritize price stability rather than employment and raise rates, which can lead to a temporary risk aversion or sales in growth and liquidity -sensitive assets such as stocks and cryptocurrencies. However, this would only strengthen the long-term crypto-bull bag.
“However, in the middle of the long term, this dynamic would strengthen the structural bull case for Bitcoin and Krypto more broadly as investors are looking for scarce, non-overreign assets to uncover sustained fiat dungeon,” Gaer said, adding that the likelihood of a long-term stagflationary regime is low.
Markus Thielen, founder of 10x research, said the disinfulation trend is likely to resume in the coming months.
“Our inflation model and leading indicators point to declining inflation, a background that gives risk assets space to run. A 25BP cutting with guidance for more would soothe markets, did not eat them and set the stage for a bullish finish for the year,” Thielen told Coindesk.
Prominent tokens
Since Bitcoin and other major cryptocurrencies reach new heights at all times, a selected group of Altcoins is ready to experience significant events. There is a growing consensus in particular about Solana’s (Sun) Price views.
“We have seen a strong demand for sun over the past 2 weeks. SolBTC is acting at its highest level of seven months and pushing up against the psychological 0.002 level, with a strong upward momentum that continues from early August. Rotation to Sun occurs naturally when more Sol DATs come online, with over $ 1b bred (or be raised) In different sun -vehicles, “Gaer explained.
The other favorites among the industry’s participants are Defi Protocol ethhena’s ENA -Token and its synthetic dollar, USDE, as well as decentralized Exchange Hyperliquid’s hype token.
“Younger Investors Aren’t Interested in Slow 7% Annualized Returns. Instead They’re Turning to Perpetuals Markets and Trading with Leverage, Making Riskies Bets with Greater Upside Potential. Hyperliquid is built for Exactly That Type of User: It’s Permissionsless, ALWAYS-ON Go-to for High-Beta Plays, Especially Among Younger Investors Who View Volatility AS A Feature, Not A Bug, “Molidor Said Explaining the Bullish case for Hyperliquids Hype-Token.
He pointed out the yield advantage that ethena has as Fed reduces the rates, which ran down the return on traditional fixed -income instruments and dollar equivalents, such as stablecoins.
Think of it as the popular yield-differential strategy in currency markets, where a country’s currency tends to strengthen when its bond yield increases compared to others and attracts capital flows due to higher returns.
“When Fed reduces the rates and short-term T-rules fall, traditional stableecoins like Circle’s less profitable, and Ethena’s tokenized basic trade becomes more lucrative. It is a rare circumstance in which ethena’s stableecoin yield goes up when the feed rate comes down, which could make token particularly attractive in the next phase of market cycle,” he noted. “
Auros pointed to CRO along with sun, BNB and hype as key points to look after during the next recovery in the crypto market.
Read more: Increasing unemployed claim eclipse inflation data as recession fears re -emerging
