Bitcoin News Today: Bitcoin near $120,000 as traders await key U.S. CPI data on Fed policy path

Bitcoin stands on the brink of a pivotal moment as traders globally await the release of the U.S. Consumer Price Index (CPI) data, a key economic indicator that could significantly influence the trajectory of the cryptocurrency market. The upcoming report, scheduled for Tuesday, is expected to clarify the Federal Reserve's policy direction, particularly regarding the likelihood of a rate cut in September [1]. Analysts emphasize that a cooler-than-expected CPI reading could solidify expectations for the Fed’s move, thereby fostering a bullish environment for risk-on assets like Bitcoin [2].

The anticipation is palpable as Bitcoin trades around $118,500 following a recent rally that pushed it above $122,000 over the weekend [2]. This movement has reversed last week’s losses, while Ethereum has seen over a 20% increase in the same period. Should the CPI data align with the widely anticipated 2.8% year-on-year increase, it could trigger a renewed surge in crypto prices [1]. Several analysts, including those from Bitwise, Bernstein, and Standard Chartered, have forecast Bitcoin reaching $200,000 before the end of the year [2]. However, these predictions remain speculative and subject to actual market conditions.

Market participants are also monitoring the derivatives market, where Bitcoin and Ethereum options trading have surged to near-yearly highs, amounting to $43 billion and $14 billion, respectively [2]. This high open interest could amplify price volatility, as derivatives traders position for potential short squeezes, sudden liquidations, or sharp price moves. The U.S. Bureau of Labor Statistics publishes CPI figures monthly, and this month’s report is considered one of the most critical macroeconomic events for both Wall Street and digital assets [2].

The current market environment reflects the heightened sensitivity of cryptocurrencies to macroeconomic signals. With the CME FedWatch tool indicating an 84.4% chance of a September rate cut—up sharply from 40% at the start of August—investors are closely tracking any changes in the Fed’s policy trajectory [2]. The potential for a rate cut has historically encouraged investors to shift toward riskier assets, including digital currencies.

Bitcoin’s price has recently shown signs of consolidation ahead of the CPI release, with some reports noting a drop to $118,630 as traders brace for the data [3]. Others indicate that the price hovers near $120,000 amid growing speculation about the inflation report’s implications [4]. The reaction to the data could determine whether Bitcoin breaks the $120,000 resistance level and continues its upward trend.

As the U.S. CPI report approaches, the cryptocurrency market remains in a state of flux, with investors keenly aware of the potential for heightened volatility. The outcome of this data release will not only shape near-term price movements but may also set the stage for a broader market rally, depending on how the Fed’s policy expectations are recalibrated [1].

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Source:

[1] https://www.investing.com/analysis/crypto-rally-stalls-as-market-awaits-key-us-inflation-data-200665161

[2] https://www.dlnews.com/articles/markets/cpi-figures-seen-to-potentially-trigger-new-bitcoin-rally/

[3] https://coincentral.com/bitcoin-btc-price-prediction-drops-to-118k-ahead-of-tuesday-cpi-inflation-report/

[4] https://www.ainvest.com/news/bitcoin-news-today-bitcoin-awaits-august-cpi-price-hovers-120k-key-inflation-data-2508/