Wednesday’s U.S. CPI report may have shown some moderation in headline inflation, but a closer look suggests that underlying price pressures remain relatively persistent.

September Fed Rate-Hike Odds Drop After Softer PPI

Expectations for a Federal Reserve rate hike in September have fallen significantly following the softer-than-expected CPI report and Thursday’s weaker producer inflation figures.

CME FedWatch data, which tracks market expectations through short-term interest-rate futures, now places the probability of a September rate increase at around 32%. A month ago, traders were assigning more than a 75% chance to such a move.

Despite the sharp decline in September hike expectations, markets still see a considerable possibility of tighter monetary policy later this year. The probability of a rate increase before the end of 2026 remains close to 70%.

Sharplink to Allocate $200M in ETH Through Lido

Sharplink (SBET), an Ethereum-focused digital asset treasury company, plans to put $200 million worth of ETH into Lido as it seeks to generate additional income from its cryptocurrency holdings.

The company will receive wstETH, which represents staked ETH deposited through Lido together with the staking rewards earned on those assets. Anchorage Digital will provide custody for the tokens.

The strategy gives Sharplink access to staking returns while allowing it to retain an asset that can be used throughout decentralized finance, including as collateral. The allocation expands the company’s existing approach to ETH staking and restaking.

Sharplink CEO Joseph Chalom said the move is intended to increase the productivity of the company’s ETH reserves. Lido said approximately $16.5 billion in ETH is currently staked through its protocol, with around $10 billion worth of wstETH being used as collateral.

July U.S. PPI Comes in Below Expectations

The U.S. Producer Price Index showed no monthly change in July, falling short of economists’ forecast for a 0.2% increase. The reading followed a 0.1% decline in June.

On a yearly basis, producer prices increased 4.7%, below the 4.9% estimate and down from June’s 5.5% rise.

Core PPI, which excludes food and energy, climbed 0.2% in July, compared with expectations for a 0.3% gain and June’s 0.4% increase.

Annual core PPI growth slowed to 4.2%, matching forecasts but falling from 4.7% in June.

Initial jobless claims also moved higher, reaching 209,000 compared with 200,000 the prior week and exceeding the 202,000 consensus estimate.

Bitcoin showed little immediate reaction and continued trading near $63,500.

Trader Makes $1.07M Bet on Bitcoin Above $65.5K

A large market participant has placed a sizable options bet on Bitcoin rising above $65,500 before the weekend.

According to Laevitas, the trader spent about $1.07 million on call options covering 4,054 BTC at a $65,500 strike price. The contracts expire on August 15.

With BTC trading around $63,500-$63,800, Bitcoin would need to gain roughly $1,700-$2,000 over the next two days for the options to move into profitable territory at expiration.

The position highlights a strong short-term bullish expectation that Bitcoin could break higher before the contracts expire.

PPI Becomes Another Key Market Catalyst

Investors were closely watching July’s PPI figures after Wednesday’s CPI report largely matched expectations. The latest inflation data also came shortly after weaker-than-expected U.S. employment numbers.

The combination of softer economic data has raised expectations that the Federal Reserve could maintain its current policy stance. Market pricing had put the probability of a rate pause at roughly 63%, making Thursday’s PPI report an important factor in assessing the Fed’s next decision.

Bullish Prepares for Q2 Earnings Release

Bullish (BLSH), the parent company of CoinDesk, is scheduled to report its second-quarter results later Thursday.

Analysts expect revenue of approximately $88.44 million and earnings per share of $1.13. Bullish shares have declined more than 41% over the past 90 days.

The company’s IPO took place one year ago, but the stock remains about 80% below its record high. Shares closed Wednesday at $24.63 and were trading roughly 1% higher before the market opened Thursday.

Smaller Tokens Rally as Major Coins Lack Direction

While Bitcoin, Ether, Solana and XRP remain largely unchanged, several smaller cryptocurrencies have recorded notable gains.

OKB, MNT and VVV have each risen more than 6% over the past day, placing them among the strongest performers in the top 100 crypto assets by market value.

However, the moves do not appear to represent a significant rotation away from major cryptocurrencies. Bitcoin’s dominance remains around 59%, close to the level it has maintained since July.

Bitcoin dominance measures BTC’s share of the overall cryptocurrency market capitalization.

Sticky Inflation May Limit Bitcoin’s Upside

Macroeconomic writer Mike “Mish” Shedlock believes the underlying inflation picture remains firmer than the July CPI headline indicates.

Although consumer inflation slowed, lower energy and gasoline prices contributed to the softer headline figure. Shedlock argued that temporary declines in those categories can obscure persistent price pressures elsewhere in the economy.

He also questioned whether official inflation calculations fully capture certain food and housing-related expenses, including property taxes, insurance and home prices.

That could help explain why the softer CPI reading failed to produce a substantial decline in the U.S. Dollar Index, limiting the positive impact on Bitcoin.

BTC remains volatile but largely range-bound below $64,000.