CPI data sparks crypto rally, but a near-certain Fed rate hike looms
Solo presenter Rob from Digital Asset News analyzes the latest CPI print, rising rate hike probability, AI voice-cloning scams, and a Blockstream hack.
Summary
Rob from Digital Asset News breaks down the latest CPI report, which came in at 2.4% year-over-year — meeting expectations — and sparked a brief rally across crypto and equities. However, Rob argues the positive sentiment is likely short-lived, pointing to core PCE trending back up to 3.34%, diesel prices at all-time highs, and the 10-year Treasury yield approaching 5%. Most significantly, the probability of a Federal Reserve rate hike at the September 16th meeting has shifted from a 60/40 split to an 87% to 12.9% split, which Rob believes will negatively impact markets in the short term.
Rob also highlights political uncertainty as a market risk factor, noting that the midterm election year and President Trump's public promise of $5,000 payments to voters add to an already unstable backdrop heading into November. He covers AI voice-cloning scams targeting the elderly — including a case where an 80-year-old woman was tricked out of nearly $10,000 — and expands on the topic by noting that some scam operations rely on forced labor, with victims coerced under threat to their families. He covers the Blockstream Liquid Network hack in which over 4,000 Bitcoin were stolen and 3,400 returned by self-described white hat hackers, and conducts a Q&A session with viewers. Bitcoin gave back much of its intraday gains during the session, dropping from near $79,000 to $78,628, reinforcing Rob's caution about the sustainability of the day's rally.
Key Takeaways
FULL TRANSCRIPT
CPI Print and Market Reaction
Rob: Inflation is down, Bitcoin and the crypto and digital asset space are up, and the chances of a rate hike are way, way up. Specifically, it went from a 60/40 split to an 87% to 12.9% split as far as a rate hike for the next Federal Reserve meeting. It's a very odd place to be, but it does make sense when we take a look at just a little bit of the data.
The first thing you can notice — and I'm sure you've seen this — is the market is doing quite well today. Looking pretty good, actually. Bitcoin is almost at $79K. We're up 1.3%, 2.4%, 2.6%. Ethereum is the big winner, though. I just saw that BMNR — Tom Lee's company — is up over 10% today just on the pump of Ethereum. You've got to love the markets, because really it comes down to a lot of speculation and just a little bit of utility. And then of course across the board, BNB, XRP — everything's up. It is interesting when you take a look at the price action going on right now. It looks very good. Green is good. We like that.
But then take a look at the market cap: $2.749 trillion. Then you come over here — this is from yesterday — $2.727 trillion. And it just looks awful, except for stable coins. Just red across the board. However, right now today, everybody's enthusiastic about the inflation print. But I think it is short-lived. Even though the S&P 500 is up today roughly a couple of percentage points, that's pretty good.
Four-Year Cycle Context
When we take a look across the continuum — just how we are as far as four-year cycles — we're only down 38% from our all-time high. I know that sounds very funny: "We're only down 38%." But four years ago in 2022, we were almost down 70% at this same time frame, and we had roughly 7–8% more to go before we dropped down to the 77% price range of around $15,700. So again, this bull market is not too bad.
Breaking Down the CPI Data
Today it comes down to inflation. This is what everybody's talking about, and it's great. We see a little reduction, but it's not going to last — I don't think. I could be wrong. And what I'd like to know, especially when we get into the Q&A section, is: are prices going down for you? Do you feel like things are way cheaper than they were, or do you feel like things are kind of getting out of control?
The CPI — the Consumer Price Index — previously was 0.1. The expectation was 0.4, and we hit 0.4. The core CPI, where we strip out energy and food, came in at 0.3 — actually went up a little bit. But CPI and core CPI year-over-year is what people are looking at. We went from 3.4, and then we hit 2.5. The expectation was 2.4, and we hit expectations of 2.4% on core CPI. And that's it. Everybody's happy. Everybody's excited. Markets are going crazy. A little bit of a pump.
Core PCE and What the Fed Is Really Watching
However, let's take a peek inside what's really going on. This is the core PCE — Personal Consumption Expenditures. The core PCE is what is looked at more stringently by the Federal Reserve. We can see here the core PCE year-over-year percentage-wise. We were doing great around April — it was actually 2.6%. We were going in the right direction, coming down from almost 4%. This is what the Federal Reserve wanted to see. And now what have we done? Well, this is from April — it's gone up and up and up, a little bit down to 2.75%, and now currently we are at 3.34%. There was a little bit of a reduction, and let's see if it'll hold. But if the Fed has a dual mandate — which essentially is to make sure jobs go great and we don't get too much inflation — they're probably going to want to raise rates.
Diesel Prices at All-Time Highs
And it's not just that. As far as the price index goes, this is the diesel sales price from the Federal Reserve Bank of St. Louis. Did you know that we're at an all-time high? So when they strip out energy consumption for the core CPI, this is what they're stripping out. When you see stuff like this — diesel at an all-time high — that's not really good for inflation, because that will affect everything else that comes in. That's why the Consumer Price Index and the Producer Price Index have been steadily going up a little bit as time has gone on, because we have to roll that into the transportation of goods and services. Because diesel is so high, and that's what trucks use to transport everything, inflation is going up.
And it's not just that. It's the unleaded fuel that you put into your car — not at all-time highs, but pretty darn close.
10-Year Treasury Yield Approaching 5%
Then we can see that the 10-year yield just went to almost 5% for the first time since 2023. That isn't a big deal on its own, but you have to understand that if you can put money in and get a guaranteed almost 5% on a 10-year yield, why wouldn't you just do that? People say, "Well, it's only 5%, Rob." But people are going to hedge against what they think might be a collapse or a big pullback. If you're looking at the S&P 500 as a safe haven — well, from 1928 to 2025, you could be down 10%, 20%, 30%. Not too often, but in the 5% to 10% range it's more prevalent. As a hedge, I think that's what people actually want to do, especially when they look at this yield and go, "Wow, the government's going to pay me how much? I might actually do that."
Political Uncertainty and the Midterm Year
As a reminder, we are in the midterm year, and I see a slaughtering coming for a particular side in politics — it's not looking good. I don't know if you saw that yesterday, as Donald Trump stood up there — the President of the United States — and said, "Vote for us. Make sure we get Republicans, we contain the House, and we keep the Senate. And if that's the case, we'll give you $5,000." That was roughly 264 million adults in the population of America, which would equate to roughly $1.3 trillion. People say, "Well, $1.3 trillion — that's not that much. We have $40 trillion in debt." Okay, good enough.
So we're in a midterm election year. Usually towards November is when things get a little shaky. It's not just a four-year cycle for crypto and digital assets — political uncertainty is a big issue, and we're going to go into some very uncertain times.
Rate Hike Probability: 87% for September 16th
Because of that — and I want to correct myself here, I said 80/20 earlier — it's actually an 87% to 12.9% split that the Fed is going to raise rates at the next meeting on September 16th. We will see what goes on, but this is not looking good for the markets themselves.
Right now is a great day. I'm just saying be careful. Maybe you want to take some profits today, because September 16th is next week, I believe. If we see rate hikes, this is not going to be good for the short term of the market. Long term, we're pretty good. And people will say, "Well, that's just one time frame, Rob." I get it. I'm just saying that I think the markets will react. Even though people say it's already priced in, usually what happens is an initial shock — it goes down a little bit, or maybe a lot, who knows — and then it starts to rebound. But a 90% assurance that we're going to see a Fed rate hike is not good for the markets.
AI Voice-Cloning Scams
Now, let me think about that in the comments section. And just to finish up: it's not how much you make, it's how much you keep. I was looking through the different groups here, and this was from a user called Abomination. I don't know who this person is, but it's pretty interesting, and I've heard this story again and again. They say: "Just had the creepiest scam ever happen 20 minutes ago. I got a call from my wife telling me she forgot her wallet and needed a credit card to pay for gas." Here's the crazy thing — his wife was at home with him in the house, and she drives a Tesla. Same voice, but a little bit off. 100% sounded just like her, though. If she wasn't there and it wasn't about gas, he would have fallen for it.
These scammers are going to get better, faster, and they're going to take more money out of your pocket than I think the losses you could potentially face with meme coins. I think scammers are going to be so outrageous and get into people's savings — it's going to be pretty tough. The reason is they have tools like this, and also AI helping them along the way. I wanted you guys to be aware of that.
When I posted this, a commenter named Goss Robert said: yeah, he had an old friend who went through some legal trouble — a DUI, etc. They cloned his voice, made up a story that he needed bail money and payment to a lawyer. They knew his local area and likely the police department and court. They called his 80-year-old mother and got almost $10,000 wired out of her.
So these are the things that are happening. If you're going to diversify your portfolio and diversify your storage of crypto, please do so. And don't be a victim.
Q&A With Viewers
Rob: A commenter named November says the Fed Watch tool has been studied — 88% accurate 30 days into the decision and near 100% when you're only a few days away. I didn't know that. Thanks. So yeah, a rate hike is coming. The question then is: is it priced in, like people are telling me? Maybe. But usually what happens is everything seems priced in, and then the rest of the market goes, "What? Huh?" and just starts selling off like crazy. We get a little bit of a pullback, people buy that pullback, and then it rebounds in less than 24 hours.
A commenter says scammers should be fed to lions. I read an article about how in different countries they actually take people captive and put them in cells — essentially jail — because they've been taken off the streets or from wherever they are, and they force them to call people and run scams, or they threaten to kill their family. I know it sounds like, "Well, these people are scum and they're the worst of the world." I think some definitely are. But there is a slave trade going on throughout the entire world, and part of that is people being taken against their will, with threats to their family, and forced into forced labor. The most lucrative of those is scams.
We can look at this and say, "Well, they're the worst people all the time." To me, it's irrelevant at that point. There are some pretty awful people. The big thing is we have to protect ourselves and be aware of what's going on. That's why I'm always talking about these things — because it does us no good if you do the right things, buy during the bear market, dollar cost average, accumulate, really put things in and build up a big chunk, and then you get screwed over because of some scammer, whether that be someone forced against their will or an actual real piece of trash. These are the things I don't want you guys to go through.
A commenter named A1 Rising mentions the Trump coin. Yeah — World Liberty Financial, I guess that's who it is. They still own 80% of the Trump coin itself. They sold 20%. I've known other founders who are doing the right thing and sold a lot more than that. Trump gets the blame for not following through, but he got sued many times. A little research can tell you this. People really want him to do more things. And again, when you see somebody standing up there essentially saying, "I'm going to give you $5,000, just vote for me" — I just can't get behind that. It's like something out of Idiocracy.
A commenter named Brian mentions the flip-flop masterclass. Yeah, that was good times. I had to — well, first of all, now that I'm in Puerto Rico, you know about the internet issues and the electricity. My modem went out, so I had to go replace that. Then I came in here and the electricity shut off. Then my generator wasn't working. But yeah, it was a good one. We did a private session with the Flipflop Flipper Group, which is all real estate here in Puerto Rico. If you're not following that one and you want to be into real estate in Puerto Rico, this is the place to be. There are over 300,000 zombie homes which you can pick up for a fraction of the price, flip them, and — it's not about making a ton of money. There is a massive housing shortage here, and if you come here and do these things, you can set up people so they can have affordable housing and not some dump they're forced to be in. I think it's a good cause.
A commenter named Shinsza says: "Hey Rob, I already have a Ledger and a Tangem. Thinking about getting a third wallet. Any suggestions?" Shinsza, on this one I don't have a recommendation. I only use those two, and I get a lot of requests to review wallets and talk about different ones. I just won't do it because these ones have never been hacked and I don't want to go down that route. The only thing I would say is the iTrust thing is pretty solid. If you talk to them, they'll reveal the process of getting your crypto in. First of all, you can't get your crypto out once it's there — it's in custody for you. You can't move it out, and it takes about 10 days to get the cash out. There are a lot of hoops to go through — conferences, pictures, video. When I went there I thought, there's not a snowball's chance in hell that any hacker will be able to get these funds out. That's what I liked. It sucked because you had to wait so long, but that's it.
Jose says ponds — waiting for it to make it back to a buck. We talked about Ponds and Chicken as just a gamble, which it is. So far I put $100 in Ponds and $100 in Chicken. I'm actually up on Chicken, I think. But I'm down about $25 on Ponds — down to $75. Very disappointed. But this is what we gamble for because it's fun.
A commenter mentions Ellie Pal. Those are the ones that actually contact me, and I do review those. But that's about it.
Jimmy says: "I didn't know this one. I had my next-door neighbor get scammed over a phone refund scam and she sent $11,000 in gift cards to the scammers." Man, that sucks. It happens all the time. And people are like, "Well, how could they not figure it out?" Trust me — advanced age, the elderly, they're the most susceptible and the easiest target. And let's be honest, those are the ones that still pick up a phone. Remember that? Picking up a phone and taking a call.
A commenter named Sky says: "I have tested my 82-year-old mom and stepdad. They both failed miserably. Gave me their credit card to help out a fake family member." I am telling you right there — you are your brother's keeper. You have to make sure they're protected, because if not, they will get scammed. It's not a question of if, it's when.
Blockstream Liquid Network Hack
Oh, and then I wanted to finish with this. Let me pull this up. I wanted to cover this story, but it wasn't time earlier. I thought this was a good move. There I am — Adam Back and Blockstream. Remember that hack that happened three or four days ago, maybe last week? Blockstream has a side chain called the Liquid Network, and it's all Bitcoin-based. Hackers were able to extract over 4,000 Bitcoin. They gave 3,400 Bitcoin back, but they kept 598. They said, "Hey, we're white hat hackers. We're going to give you 3,400 Bitcoin back."
Now it comes to light that Adam Back and Blockstream are saying: you're going to give them all back, or we're going to get the authorities involved and we're going to make sure we find you. I've got to commend them for doing that — for standing up to the hackers and saying, "No, we're not going to play this game. We don't negotiate with terrorists."
But on the same side of it, I will say one thing: Blockstream messed up. They're the ones that should have been protecting their product and they didn't. So yeah, I think keeping 598 Bitcoin is extortion, but it's not like these guys are off the hook. If it wasn't for these white hat hackers giving back 3,400, they would have lost it all. To me, I looked at this and thought: that's a positive thing, and good for them. But in all honesty, Blockstream made the mistake. They allowed the hackers to do it, and they lost those funds. They actually should pay these guys a little bit for doing that service and helping them out.
Bitcoin Gives Back Gains
Bitcoin is giving it all back. Let's see — $78,628. Wow. That was fast. And now I'm down $1,000. See, maybe I'm right. But I want you to see this — this is why I was saying be careful today and maybe take some profits. The green day may not last.