FameEX Hot Topics | US CPI Data Pushes Fed Cut Odds to 94%, Bitcoin Targets $137K

Bitcoin’s bullish momentum received fresh support after the release of the July U.S. Consumer Price Index (CPI) report, which showed inflation steady at 2.7% year-over-year, matching June’s level and coming in slightly below the 2.8% forecast. Core CPI, excluding food and energy costs, increased 3.1% annually, aligning with expectations. On a monthly basis, headline CPI rose 0.2%, easing from June’s 0.3%, while core CPI gained 0.3%, up from 0.2% previously. The data paints a picture of cooling inflation without a significant downside surprise, offering a constructive backdrop for risk-on assets like Bitcoin.

Lower inflation readings have reinforced market optimism for monetary easing, a scenario historically favorable for Bitcoin. A more accommodative interest rate environment reduces the opportunity cost of holding non-yielding assets, potentially attracting more institutional and retail capital into the crypto market. Following the CPI announcement, CME FedWatch showed expectations for a September Federal Reserve rate cut climbing to 93.9%, indicating that traders now see an almost certain probability of monetary easing. While the stable core CPI reading suggests lingering inflationary pressures, it also signals that the Fed may take a data-dependent but dovish path in the months ahead.

The focus now shifts to next week’s Producer Price Index (PPI) and Core PPI data, expected at 2.3% and 2.5%, respectively. A softer-than-anticipated reading could cement the case for a rate cut and bolster Bitcoin’s macro outlook. Historically, periods of lower rates and increased liquidity have coincided with stronger crypto rallies, as investors seek higher-return opportunities outside traditional fixed-income markets. A favorable macro backdrop could combine with bullish technicals to accelerate Bitcoin’s next move higher.

In terms of market action, Bitcoin touched $122,190 on Monday after a bullish weekend but quickly reversed, dropping 3% to $118,500 and failing to secure a daily close above the $120,000 threshold. Post-CPI, BTC rebounded to $119,500, with traders eyeing $119,982 as the immediate breakout point. A decisive daily close above $120,000 would mark a historic first for Bitcoin and could serve as the catalyst for a sharp rally toward the next resistance levels.

Technically, Bitcoin recently broke above a bullish flag pattern on the daily chart, a signal that often precedes continuation rallies. The pullback following the breakout may be a standard retest, with a primary upside target near $130,000. Technical analyst Titan of Crypto forecasts an even higher move to $137,000 based on a descending trendline breakout observed on Sunday. Still, failure to hold the $120,000 level could open the door to short-term downside, with critical support located between $117,650 and $115,650 — an area that coincides with a CME futures gap, making it a pivotal zone for traders to watch.

Disclaimer: The information provided in this section is for reference only and does not represent any investment advice or the official views of FameEX.