Bitcoin News Today: Bitcoin Rises on Lower CPI as Fed Rate Cut Hopes Fuel Crypto Optimism

The latest U.S. inflation data has injected fresh optimism into the cryptocurrency market, with Bitcoin showing signs of responding to the softer CPI reading. The Consumer Price Index (CPI) came in at 2.7% year-over-year, slightly below the expected 2.8%, reinforcing expectations of a Federal Reserve rate cut by the end of the year, potentially as early as September [1]. The lower inflation reading has been interpreted as a positive signal for risk assets, including cryptocurrencies, with Bitcoin briefly surging above $119,000 following the release [1].

Analysts have outlined three potential scenarios for Bitcoin's near-term performance. In a bullish scenario, a confirmed September rate cut could push Bitcoin above the $120,000 resistance level and set the stage for a move toward $125,000 by the end of Q4 2025. A neutral scenario suggests that without immediate Fed action, Bitcoin may remain range-bound between $116,000 and $120,000. A bearish outcome, however, could see prices pull back toward $112,000 if inflationary pressures reemerge or the Fed adopts a more hawkish stance [1].

Ethereum has also shown resilience, trading near key support levels above $4,000. If the rate cut narrative continues to gain traction, Ethereum could see a move toward $4,500 in the coming weeks. Altcoins, in general, are expected to benefit from increased liquidity and renewed investor confidence should the Fed signal further easing [1].

The broader macroeconomic backdrop remains cautiously bullish. While the headline CPI reading supports the case for a rate cut, core inflation remains elevated at 3.1%, slightly above estimates. This suggests that the Fed may proceed with caution, which could lead to short-term volatility, especially around key central bank communications [1].

The upcoming FOMC meeting in mid-September will be a critical event to watch, with markets likely to react sharply to any new signals from the Fed. Until then, Bitcoin and altcoins are expected to trade in a tighter range, with potential breakouts contingent on further macroeconomic easing [1].

Market sentiment has aligned with traditional financial markets, as investors increasingly view cryptocurrencies as a strategic asset rather than a speculative one. The potential for a rate cut has already begun to influence positioning, with traders adjusting their strategies in anticipation of a more dovish policy environment [1].

Source: [1] Crypto Market Outlook After US Inflation Data: Bitcoin Eyes $125K as CPI Hits 2.7% (https://cryptoticker.io/en/crypto-market-outlook-us-inflation-data-bitcoin-125k/)