According to CoinDesk, economists predict that the US Consumer Price Index (CPI) increased by 0.6% in August, triple the pace of July's 0.2% increase. On a year-over-year basis, the CPI is expected to have grown at a rate of 3.6% compared to 3.2% in July. The higher inflation is attributed to resurgent oil prices, with WTI Crude Oil reaching a new 2023 high just below $89 per barrel, up 33% since the beginning of July.

The core CPI, which excludes food and energy prices and is more closely monitored by US Federal Reserve policymakers, is anticipated to have dipped to a 4.3% year-over-year pace in August from July's 4.7%. This would be the slowest rate of core CPI inflation since mid-2021. The summer rally for Bitcoin and the broader cryptocurrency market has been significantly impacted, with Bitcoin dropping below $25,000 to its weakest level since mid-June and Ether falling to a six-month low.

Analysts attribute the decline to interest rates that appear to remain higher and for longer than anticipated. While the Federal Reserve is likely to maintain its benchmark fed funds rate at its policy meeting later this month, investor hopes for rate cuts in the near future have diminished due to the continuing strength of the economy and inflation. A few months ago, market participants expected the first Fed rate cuts in late 2023, but those expectations have shifted to early 2024. Current bets on the first rate cut have been pushed out to roughly one year from now. Even if the core CPI decline occurs, a 4.3% inflation rate is still more than double the Fed's 2% target, making it difficult for central bankers to claim victory over inflation as consumers face rising prices at the pump.