KEY POINTS
Bitcoin’s price is finding renewed strength as traders eye targets as high as $137,000 following the release of U.S. inflation data for July. The Consumer Price Index (CPI) report, which showed inflation holding steady, has significantly boosted market expectations for a Federal Reserve interest rate cut in September, with the probability now surging to nearly 94%.
Inflation Data Fuels Rate Cut Hopes
The U.S. Bureau of Labor Statistics reported that the headline CPI remained at 2.7% year-over-year, unchanged from June and slightly below the 2.8% forecast. Core CPI, which strips out volatile food and energy prices, increased 3.1% annually, meeting analyst expectations. On a monthly basis, headline inflation cooled to 0.2% from 0.3% in June.
This data reinforces a positive macroeconomic environment for risk-on assets like Bitcoin. Cooling inflation strengthens the argument for the Federal Reserve to implement monetary easing. A lower interest rate environment typically reduces the opportunity cost of holding non-yielding assets, potentially attracting fresh capital into the cryptocurrency market.
Following the report, the CME FedWatch Tool indicated that traders have priced in a 93.9% chance of a rate cut at the Fed’s September meeting. However, the in-line core CPI figure suggests that underlying price pressures persist, meaning the central bank may still seek more conclusive evidence before committing to a policy change.
Bitcoin’s Battle for the $120,000 Level
Bitcoin experienced a volatile start to the week, surging to a high of $122,190 on Monday before a swift 3% rejection brought the price back to $118,500. The asset has since rebounded to around $119,500 following the CPI release, but it continues to struggle with the critical $120,000 resistance. Securing a daily close above this level for the first time in history is seen as a key catalyst for the next phase of its rally.
Technical Outlook and Key Price Targets
From a technical perspective, Bitcoin recently broke out from a bullish flag pattern on its daily chart, with the current pullback potentially serving as a retest of the breakout level. This pattern suggests a primary price target of $130,000. Echoing this bullish sentiment, technical analyst Titan of Crypto highlighted a breakout from a descending trendline, projecting a move toward $137,000.
Support Levels to Watch
However, the immediate upside is contingent on reclaiming the $120,000 mark. Failure to do so could invite short-term selling pressure. The first major area of support lies in the range between $117,650 and $115,650, a zone that also aligns with a CME gap formed over the weekend. A more significant breakdown could see the price test a deeper CME gap near $95,000.
In conclusion, Bitcoin’s immediate trajectory appears closely tied to macroeconomic developments and the market’s perception of future Fed policy. While technical patterns and rising rate cut odds paint a bullish picture, the asset must first overcome the formidable $120,000 resistance to validate its upward momentum and fend off potential downside risks.
