Analysts say that a softer CPI reinforces the Fed's path of unwinding, supporting Bitcoin and risk assets.

A softer reading of inflation in the U.S. is strengthening expectations for more cuts in the Federal Reserve's rates and providing risk assets, including Bitcoin, with a short-term tailwind, according to analysts.

The CPI print for September was slightly below expectations, indicating that disinflation remains intact and reinforcing the Fed's argument to maintain a gradual unwinding path.

Analysts said that the numbers “point to a continuation of disinflation despite persistent housing and service prices,” noting that Treasury yields decreased and the dollar fell as markets anticipated a greater likelihood of another rate cut before the end of the year.

“For Bitcoin and digital assets in general, the printing validates the recent consolidation as part of an ongoing correction phase rather than a peak,” analysts added, suggesting that ETF inflows could increase if yields continue to decline.

David Siemer, CEO of Wave Digital Assets, said that inflation is “high but not accelerating” providing cryptocurrency markets “some positive momentum after a period of volatility.” He noted that a weaker dollar and a moderate Fed outlook tend to boost digital assets like Bitcoin and Ethereum, even as traders remain cautious.

“The market is not yet in full rally mode,” Siemer said. “Traders are taking incremental exposure, not betting on a direct run. If we see clear signs of rate cuts and sustained inflows, we could be looking at a significant move upwards as we approach the end of the year.”

Kyle Chassé, founder of MV Global, echoed that vision, calling the softer CPI a relief for risk assets.

“In a world of lower rates, the maintenance cost of Bitcoin decreases, while ETFs continue to act as the constant supply that removes coins from the market,” he said.

However, Chassé warned that “rising core prices, increasing import costs, and a strong dollar could still bite,” adding that the Fed will likely need “a few softer data points and fresher employment numbers before declaring victory.”

The Bureau of Labor Statistics reported a year-over-year overall inflation of 2.7%, below the estimated 2.8%, while core inflation rose by 2.9% compared to the expected 3.0%.

Both measures increased by 0.2% month-on-month, the slowest pace in three months, with housing costs showing the smallest increase since early 2021. The data, delayed by the government shutdown, have reinforced investors' expectations that the Fed may follow the widely anticipated cut next week with another in December.

With Treasury yields falling and the dollar easing, analysts say the environment now favors both stocks and digital assets, especially if disinflation persists during the next round of economic data.