Bitcoin traded near $63,700 on Thursday after the latest US inflation report matched market forecasts, temporarily calming concerns over tighter monetary policy but failing to trigger a sustained rally in the cryptocurrency market.
US inflation aligns with forecasts
July’s Consumer Price Index data from the US showed headline inflation rising 0.1% month on month and 3.4% year on year. Core inflation, which excludes food and energy, increased 0.2% over the month but eased to an annual pace of 2.5%.
This data reduced the likelihood of another Federal Reserve interest rate hike in September. Futures markets slashed the probability of a rate increase to around 38%, falling from 46% prior to the inflation figures.
Financial markets initially reacted positively: gold advanced 1.3%, Ethereum added just over 1%, Bitcoin climbed roughly 0.5%, and S&P 500 futures edged up 0.2%. The gains for cryptocurrencies, however, were short-lived and quickly faded as the session progressed.
Maksym Sakharov, co-founder and CEO of WeFi, a provider of debanking infrastructure, commented in a note that while the softer inflation reading gives the Federal Reserve more room to consider a rate hike, a single report does not resolve the underlying debate on the inflation trajectory.
Economists held positions on both ends ahead of the release, so any outcome was likely to prompt liquidations and volatility, especially in crypto. The market’s initial move reflected leverage rather than conviction. Without greater policy clarity from the Federal Reserve, CPI releases will continue to drive sharp reversals and forced exits.
The inflation report also provided details that could enable the central bank to maintain a cautious stance. Shelter costs only rose 0.1%, energy prices fell 1.5%, and gasoline declined 2.9%. Specific categories of goods also appear to be moving past the tariff-driven price rises seen last year.
Key events lie ahead for investors
With the latest inflation data offering no decisive direction, investor focus is shifting to several upcoming events. The Federal Reserve’s Jackson Hole meeting later in August is expected to offer additional insights into how policymakers see the economy and the potential path for interest rates.
The US employment report, scheduled for September 4, will provide further evidence of labor market strength, followed by the next inflation release on September 11. Any unexpected weakness in jobs or inflation could alter the outlook for monetary policy and offer support for assets sensitive to risk, such as Bitcoin.
Bitcoin’s price outlook and technicals
On the technical front, Bitcoin’s 4-hour chart remains bearish and signals that downward pressure could continue. The cryptocurrency is trading below critical moving averages, with momentum indicators pointing to continued weakness.
The Relative Strength Index, or RSI, stands at 42, which is below the neutral level of 50 and indicates sellers currently have more influence in the market. Meanwhile, the MACD indicator remains in negative territory, reinforcing a bearish setup.
If selling persists, Bitcoin risks dropping below the $63,000 support and potentially retesting the August 3 swing low of $62,185. An extended slide could bring the July 6 low of $61,228 into focus, with another significant demand zone located at $57,659.
On the other hand, if buyers regain momentum, Bitcoin may target $64,430, marking the 4-hour Inducement Liquidity (ILQ), before aiming for resistance levels at $65,423.
Mini dictionary: Inducement Liquidity (ILQ), a technical analysis concept referring to a price level where the market is likely to trigger liquidity, often resulting in sharp price movements as traders’ orders are activated.
| Support Level | Resistance Level | Indicator | Current Value |
|---|---|---|---|
| $63,000 | $64,430 (ILQ) | RSI | 42 |
| $62,185 | $65,423 (Resistance) | MACD | Negative |
| $61,228 | – | – | – |
| $57,659 | – | – | – |
