September CPI data is out, and U.S. inflation isn’t looking great: The U.S. September unadjusted CPI YoY came in at 3.7%, the highest since May this year, exceeding the market expectation of 3.6%. After the data release, the probability of the Fed raising rates by 25bp in September skyrocketed from 16% to over 50%. Rate hikes impact U.S. stocks much more than crypto: Higher rates increase funding costs, forcing U.S. investors to chase higher risk-reward opportunities. If AI companies fail to deliver profits that 'significantly exceed expectations,' their stocks could take a nosedive. The marginal impact of rate hikes on Bitcoin is limited. Funds flowing out of AI could offset the liquidity impact of rate hikes (not extreme rate hikes, though). Meanwhile, U.S. debt issues are worsening due to rate hikes, pushing funds into Bitcoin as a hedge.