Bitcoin Surges 10% as US Inflation Data Boosts Bullish Sentiment

Bitcoin investor sentiment has reached a seven-month high, with a bullish pennant pattern suggesting a potential rally to $115,000. This optimism is fueled by recent economic data from the US, which exceeded expectations. The Consumer Price Index (CPI) for May came in at 2.4% year-over-year, lower than the forecasted 2.5%. Similarly, the core CPI also beat estimates at 2.8%, compared to the expected 2.9%. These figures led to a brief rally in Bitcoin prices above $110,000 and a significant drop in the US Dollar Index (DXY) to 98.5, a multi-month low.

The market's swift adjustment to the Federal Reserve’s interest rate expectations has contributed to the bullish sentiment around Bitcoin. However, the odds of an interest rate cut by the Federal Reserve next week remain low, as headline CPI is rising again for the first time since January 2025. Despite this, the overall market sentiment around Bitcoin remains bullish, with the potential for prices to reach new highs above $115,000 this week. A price rally might occur on June 12, following the release of the US Producer Price Index (PPI) data. The PPI is expected to rise by 0.2% month-over-month, with the core PPI at 0.3%. A lower-than-expected print could amplify Bitcoin’s rally by reinforcing dovish Fed expectations over the second half of 2025. Conversely, a higher-than-expected PPI or unexpected macroeconomic developments could lead to pullbacks.

The bullish sentiment is also reflected in Bitcoin's low funding rate at an all-time high price range. This indicates that the underlying rallies are mostly spot-driven, suggesting higher prices without significant sell-offs. From a technical standpoint, Bitcoin is forming a bullish pennant on the 1-hour chart, signaling potential bullish continuation. The relative strength index (RSI) is resetting near the 50 level, indicating a healthy cooldown within a higher consolidation range. Immediate resistance lies at $110,000, but a liquidity sweep around $108,000 could occur first, clearing late long orders and absorbing sell-side liquidity to fuel further upside. The pennant’s measured move projects a bullish target of $115,000, aligning with the upper trendline extension. Additional price support lies at $106,748, with a break below risking a drop to $104,900. A swift recovery from this drop could enhance BTC’s upside potential, but BTC must maintain a bullish close on the higher time chart.

Renewed optimism over a US-China trade deal announced by US President Donald Trump has also buoyed Bitcoin prices. The agreement, described as “done” pending final approval, has sparked a risk-on mood, with BTC consolidating under $110,000. This deal is expected to reduce macroeconomic threats that dragged BTC prices to a year-to-date low of $74,500 in April after Trump’s tariff announcements. The positive social media comments, tracked across various platforms, have doubled negative ones since Trump’s election win in November 2024, further contributing to the bullish sentiment around Bitcoin.