All major coins in the cryptocurrency market experienced gains during early Tuesday trading, with Bitcoin edging closer to $120,000 as the US CPI data review came into sharp focus.
According to data from CoinGecko, Bitcoin edged close to another all-time high with a 2.2% daily rise while Ether recorded a 17.2% weekly gain to trade at a record $4,300, the highest level since 2021. At the time of writing, Bitcoin was trading at $118,946.40. The price of Ether rose from a flat of $4,256.90 on Sunday to $4,302.28 at the time of writing.
Traders Hedging US CPI Data Event
The apparent crypto rally took place alongside consensus for looming US CPI data showing a 2.8% annual inflation. According to QCP Capital, there were chances for softer US CPI data readings that “would likely lock in September rate cut expectations.” The analyst noted that there were nearly 100% odds after dovish Fed commentary, but anything different could slow down the anticipated crypto rally.
At the same time, inflows to derivatives showed that crypto traders were likely hedging the US CPI data event risk that had put Bitcoin in the $115k – $118K range. The move takes place at a time investors are looking ahead to several inflation reports that have seen stocks trading on the edge of an all-time high, which has also pulled the major cryptocurrencies alongside them.
Bulls Targeting $135K to $138K
The ongoing crypto rally that the looming US CPI data review has most likely fueled went on to flip the usual market dynamic where altcoin strength pulled Bitcoin higher instead of the other way round. According to Alex Kuptsikevich, the chief market analyst at FxPro, Bitcoin was clearing the $120,000 technical barrier. He noted:
“This is one of the few times when a rally in major altcoins has inspired BTC to break through […] the bull’s nearest target now looking to be the $135,000–$138,000 area.”
Kuptsikevich further noted that the performance of ETH may have been propelled by pro-cryptoUS. legislation and heavy inflows into the ETF segment. Adding that the ongoing on-chain activity was nearing historical highs, Kuptsikevich added:
“Ethereum has gained over 21% in seven days and 45% in the last 30 days […] we would not be surprised to see its $4,800 peak updated in the coming days.”
Rapid Expansion of US Debt
Adding his weight to the subject, Markus Thielen, CEO of 10x Research, noted that apart from the imminent US CPI data review, the current crypto rally was also the result of the rapid expansion of US debt. Thielen opined that Bitcoin’s breakout in July coincided with President Donald Trump’s signing of Big Beautiful Bill, which included a $5 trillion debt ceiling increase. He said:
“Bitcoin’s breakout isn’t random, it’s being fueled by the fastest U.S. debt expansion in history, and that momentum isn’t slowing down […] whether the economy stays strong or dips into recession, the flood of new debt is a tailwind for hard assets like bitcoin and gold.”
Conclusion
The US government is set to release two inflation reports in the coming week. The next Consumer Price Index (US CPI data) review for July is likely to be announced next Tuesday, while the Producer Price Index (PPI) is slated for Thursday. Analysts now believe a crypto rally is imminent, with the next significant resistance level of $133,000 being in sight, positioning the market for a bullish market.
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Summary
- Bitcoin briefly hit the $120K mark after a brief pullout at the beginning of August.
- Ether surged over 17% to trade at around $4,300, its highest level in recent days since December 2021.
- Looming US inflation data, such as the UC CPI data review and ETF inflows, are positively impacting the crypto market dynamics.
Frequently Asked Questions
Is CPI bullish or bearish?
Generally, a higher CPI reading is seen as positive (bullish) for the USD, while a lower reading is viewed as negative (bearish).
How does High CPI influence the crypto market?
High CPI signals rising inflation, often leading to rate hikes that strengthen the US dollar. This can reduce demand for risk assets like BTC, lowering prices.
How does low CPI affect the cryptocurrency market?
Low CPI indicated controlled inflation, potentially weakening the dollar and boosting crypto prices as investors seek alternative assets.
Glossary to Key Terms
CPI: The Consumer Price Index (CPI) is a metric that tracks price changes for a basket of goods and services, such as food, housing, and transportation.
PPI: Producer Price Index (PPI) is a metric that tracks producer cost changes, often foreshadowing CPI shifts. Rising PPI may signal future inflation, impacting crypto similarly to CPI.
Reference
The price predictions and financial analysis presented on this website are for informational purposes only and do not constitute financial, investment, or trading advice. While we strive to provide accurate and up-to-date information, the volatile nature of cryptocurrency markets means that prices can fluctuate significantly and unpredictably.
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