Bitcoin's Prospects Brighten Amid Steady U.S. Inflation and Rate Cut Speculation
According to Cointelegraph, the July U.S. Consumer Price Index (CPI) remained steady at 2.7% year-over-year, aligning with June's figures and falling short of the anticipated 2.8%. This stability in inflation has bolstered expectations for a Federal Reserve rate cut, with market predictions for a September reduction soaring to 93.9%, as reported by CME FedWatch. The core CPI, which excludes volatile food and energy prices, rose by 3.1% annually, meeting forecasts. On a monthly basis, the overall CPI increased by 0.2%, a slight decrease from June's 0.3%, while the core CPI saw a 0.3% rise, up from the previous 0.2% gain.
The data presents a mildly bullish scenario for Bitcoin, as cooling inflation enhances the likelihood of monetary easing, a favorable condition for risk-on assets. A lower interest rate environment diminishes the opportunity cost of holding Bitcoin, potentially attracting new capital into the market. Despite the positive outlook, the core CPI's alignment with expectations suggests that underlying price pressures persist, indicating that the Federal Reserve may require additional evidence before implementing a rate cut. Looking ahead, the upcoming Producer Price Index (PPI) and Core PPI, estimated at 2.3% and 2.5% respectively, could play a crucial role. A softer-than-expected outcome might confirm a bullish macro setup for Bitcoin, reinforcing lower rate expectations and boosting demand for risk assets like Bitcoin.
Following a bullish weekend, Bitcoin reached a high of $122,190 on Monday, but gains were short-lived as the price quickly dipped 3% to $118,500, failing to secure a daily close above the $120,000 mark. After the CPI data release, Bitcoin rebounded to $119,500, though a decisive close above $119,982 remains crucial to confirming immediate upside momentum. A daily close above $120,000 would be a historic first, potentially igniting the next phase of Bitcoin’s rally. On the technical front, a bullish flag pattern on the daily chart recently broke to the upside. The current pullback could be a retest before continuation toward the primary target of $130,000. Notably, technical analyst Titan of Crypto projects a similar bullish scenario, eyeing $137,000 based on a descending trendline breakout observed on Sunday.
However, failure to reclaim $120,000 could invite short-term downside pressure. Immediate support lies in the $117,650–$115,650 zone. This key support area also coincides with the CME gap formed over the weekend, making it a critical zone for traders to monitor. Despite holding higher ground, Bitcoin is not entirely immune to losing the critical $100,000 support, with a deeper correction potentially testing levels as low as $95,000. This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
