Bitcoin Holds $63,400 as Soft CPI Eases Rate Pressure, but Coldcard Hack and ETF Outflows Cap Gains

Bitcoin price action remains subdued, trading near $63,400 as the largest cryptocurrency stabilizes after back-to-back inflation reports strengthened the case for a Federal Reserve pause in September. The muted response reflects persistent headwinds from a deepening hardware wallet security crisis and continued outflows from US spot Bitcoin ETFs, and it's raising a genuinely uncomfortable question for traders who've spent weeks waiting for exactly this kind of dovish data to finally break the range.

Key Takeaways

• July CPI and PPI both landed softer than or in line with expectations, cutting September rate hike odds, though estimates vary meaningfully by tracker, from roughly 34% on Polymarket to the high 30s and low 40s on CME's FedWatch tool

• The Coldcard hardware wallet exploit has escalated past $130 million in estimated losses, now tracked to at least 15 separate attackers exploiting the same firmware flaw

• US spot Bitcoin ETFs posted a third straight day of net outflows Wednesday, $61.1 million, extending a reversal that began Monday after a five-day, $853.5 million inflow streak ended

• The CLARITY Act remains stalled, the Senate returns from recess September 14, with the actual cloture vote scheduled for September 15

• Some analysts are now openly questioning whether the "Bitcoin bottom" thesis is breaking down, given how little momentum two consecutive soft inflation prints produced

Soft CPI Eases Rate Pressure, But Bitcoin Price Rally Fails to Materialize

Inflation Data Comes In Line With Expectations

Wednesday's July CPI report provided the week's first major catalyst. Headline CPI rose 3.4% year-over-year, matching consensus, while core CPI came in at 2.5%, also in line. Monthly CPI landed at 0.1%. Traders responded by cutting September rate hike odds, though the exact move depends on which tracker you're watching, CME's FedWatch tool showed odds falling to around 42% immediately after the release before drifting toward 38% later Wednesday, while Polymarket, more heavily used by crypto-native traders, showed odds closer to 34% to 36% both before and after the print.

Underneath the headline relief, the report wasn't uniformly soft. Shelter costs rose 0.1% again, a stubborn contributor that has accounted for roughly two-thirds of the headline monthly increase for months running. Energy prices fell 1.5% for the month, but the annual energy figure still sits up 14.7%, a legacy of sharp gains earlier in the year tied to the escalation around Iran, including a 10.9% spike in March alone. The broader disinflation narrative is real, but it's happening against a backdrop that hasn't fully unwound yet.

PPI Data Strengthens Disinflation Narrative

Thursday's Producer Price Index added a second dose of disinflationary evidence. The Producer Price Index for final demand was unchanged in July, according to the Bureau of Labor Statistics' own release, below the 0.2% consensus forecast. Annual wholesale inflation eased to 4.7% from June's 5.5%, also below the 4.9% consensus, with core PPI at 4.2% annually. Energy was the biggest source of relief, final-demand energy prices fell 3.1% for the month, with gasoline dropping 5.7%, accounting for more than half of the total decline in final-demand goods prices.

Chris Rupkey, chief economist at Fwdbonds, put it plainly to CNBC: "Net, net, pipeline pressures at the lower stages of production are not adding to the inflation risks the consumer faces.”

Why Bitcoin Didn't Rally on the News

Two soft inflation prints in two days should have been enough to break Bitcoin out of a range it's held for six to seven weeks. It wasn't. Bitcoin stayed capped below $65,000, and that gap, between what the data should have produced and what actually happened, is the real story here, not the CPI or PPI numbers themselves.

Part of the explanation is mechanical. Both readings were largely priced in ahead of release, leaving little room for a genuine surprise to work with. "An in-line report can remove a tail risk," said CF Benchmarks' head of research Gabe Selby. "It takes a genuine surprise to create a catalyst."

But priced-in data doesn't fully explain a flat reaction to two consecutive dovish prints, and two independent signals point to something more cautious underneath it. Sygnum Bank's chief investment officer Fabian Dori argues the medium-term liquidity outlook hasn't actually shifted, structural factors like Treasury cash balances and stablecoin adoption matter more than any single inflation report. Options markets agree: DWF Labs managing partner Andrei Grachev noted that traders are still paying more for downside protection than upside, even after the CPI print matched forecasts. Neither signal moved this week, and that's the tell, professional positioning hasn't turned genuinely bullish despite two constructive headline numbers in a row.

Ethereum Held Up Slightly Better

Ethereum's reaction diverged modestly from Bitcoin's. ETH rebounded roughly 3% in the immediate wake of the CPI release, briefly lifting above $1,900, before settling back into a similar wait-and-see pattern by Wednesday afternoon, trading in the $1,870 to $1,915 range through the rest of the session. That relative outperformance wasn't dramatic, but it's consistent with a pattern that's shown up repeatedly this summer: Ether has tended to react somewhat more sharply to macro catalysts than Bitcoin, in both directions, even as the two assets remain broadly correlated.

Coldcard Hack Escalates Past $130 Million

The Coldcard hardware wallet exploit that began July 30 has continued growing, with total losses now estimated to exceed $130 million. Galaxy Research has identified at least 15 separate attackers exploiting the same underlying firmware flaw, a vulnerability affecting any wallet generated with compromised firmware dating back to March 2021.

One detail continues to puzzle investigators: a significant portion of the stolen Bitcoin hasn't moved since the theft, sitting untouched in the same wallets it was deposited into. Two explanations have been offered, either the attackers are waiting for scrutiny to fade before laundering funds through mixers or exchanges, or there's genuinely no viable path to launder a sum this visible given current blockchain surveillance capabilities. As TechCrunch put it, describing the attack's method, "the hackers essentially figured out how to cut keys at scale."

Coinkite has released fixed firmware and stated plainly that updating alone doesn't fix an already-compromised seed, affected users need to generate an entirely new wallet and migrate funds, not just patch the existing one. Every Coldcard user remains at risk regardless of whether they've been personally affected so far, since the underlying vulnerability applies to any wallet generated with the compromised firmware, not just the ones already targeted.

One victim, Jonathan Goodman, described losing $1.6 million despite what he called doing "everything right": never sharing his seed phrase, keeping devices offline, storing backups across multiple physical locations. "None of it mattered," he wrote. "All because the hardware that created the seed phrase originally had one line in their code from 2021 that had a vulnerability." His account illustrates why this exploit has rattled confidence in self-custody more broadly than a typical hack, the failure sat in the device generating the keys, not in anything a user did wrong.His account is a useful reminder of understanding the difference between a compromised device and a compromised habit.

Bitcoin ETF Outflows

The five-day, $853.5 million inflow streak that closed out the prior week has now partially reversed. Monday brought $144.6 million in outflows, led by IBIT (-$53.6 million) and GBTC (-$52 million). Wednesday added another $61.1 million, this time led by Fidelity's FBTC (-$46.8 million) and IBIT (-$14.3 million).

Source: SoSoValue data, Farside Investors

Three consecutive days of outflows following a genuinely strong inflow week is a meaningful reversal in its own right, and it's arriving at almost exactly the moment the market needed sustained institutional demand to validate a breakout attempt. Whether this becomes a fourth straight outflow day or reverses again is arguably a more important signal than either inflation report this week.

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The CLARITY Act's Timeline, Precisely

The Senate began its recess August 10 and returns Monday, September 14. The actual procedural test, a cloture vote on the CLARITY Act, is scheduled one day later, Tuesday, September 15. Both dates matter, and it's worth being precise about which is which, the return date isn't the vote date.

Prediction markets on Polymarket have shown the bill's odds of passage in 2026 somewhere in the roughly 16% to 21% range across recent snapshots, down substantially from an earlier peak this year. The core holdup remains an ethics provision restricting officials with significant crypto holdings from certain conflicts of interest, unresolved despite the bill clearing the House in July 2025. Seven Democratic senators whose votes are needed to reach the 60-vote threshold have cited insufficient consumer protections and illicit-finance safeguards as their conditions for support, and none of that gets negotiated while the chamber remains out of session.

What to Watch

Market Outlook

Bitcoin's failure to rally on two consecutive soft inflation reports suggests consolidation within an established range rather than preparation for a breakout. Support sits near $63,400 to $63,600, resistance near $67,200 to $67,300. A sustained break above resistance, backed by renewed ETF inflows and broader participation, would signal genuine recovery. A break below support, particularly alongside further outflows or fresh regulatory disappointment, opens a path toward the July swing low near $57,500 to $57,700.

The combination of moderating headline inflation, a still-sticky core PPI reading feeding directly into the Fed's preferred inflation gauge later this month, and a genuinely priced-for-caution options market suggests this range is unlikely to resolve cleanly in either direction until one of the remaining catalysts, ETF flow persistence, the FOMC minutes, or Jackson Hole, actually forces the issue. For now, the market is waiting for confirmation that neither inflation report this week was able to supply on its own.

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This article covers market conditions as of publication time and does not constitute financial advice. Crypto markets are highly volatile. Full Risk Disclaimer →