Bitcoin Nears $115K on US Inflation Data Amid Mixed Trader Sentiment
Bitcoin (BTC) approached three-week highs on Thursday as the US Consumer Price Index (CPI) data aligned with market expectations, intensifying speculation about upcoming Federal Reserve interest rate cuts. BTC/USD briefly surged to $114,731, reflecting renewed optimism in the cryptocurrency market.
Inflation Data Supports Rate Cut Bets
The August CPI report showed inflation at its highest since January but matched forecasts, complementing a notable decline in the Producer Price Index (PPI) released the previous day. Despite this, the most significant macroeconomic surprise came from initial jobless claims, which rose to 263,000—the highest weekly figure since October 2021—surpassing the anticipated 235,000.
These labor market concerns have strengthened market expectations for Federal Reserve rate cuts, with futures markets pricing in approximately 75 basis points of reductions by year-end. The probability of a September 17 rate cut exceeding the standard 0.25% is now estimated at 11%, according to CME Group’s FedWatch Tool.
Traders Diverge on Bitcoin’s Short-Term Trajectory
Crypto analysts remain divided on Bitcoin’s immediate path after the CPI release. Some traders, including popular commentator Jelle, interpret the data as supportive of higher prices, citing the combination of subdued inflation and labor market weakness as a catalyst for upcoming rate cuts.
Technical analysis highlights the significance of Bitcoin reclaiming the $113,500 level, previously resistance, now acting as support. Trader BitBull identified this as a pivotal development, suggesting that reclaiming the $117,000 mark could confirm a new all-time high.
Conversely, other market participants caution about a potential short-term retracement. Trader Skew points to liquidity clusters around 2,000 BTC on exchange order books, implying a possible liquidation event targeting longs who entered positions post-CPI. Similarly, crypto entrepreneur Ted Pillows noted a pattern from the past three CPI releases where Bitcoin rallied before the data but declined immediately afterward, indicating a possible repeat scenario.
Historical Volatility Warrants Caution
Bitcoin’s reaction to inflation data has been characterized by rapid price swings, with false breakouts and pullbacks common in recent months. This historical context advises prudence as the market navigates the interplay between macroeconomic indicators and trader positioning ahead of the Federal Reserve meeting.
Disclaimer: This article does not constitute investment advice. Trading cryptocurrencies involves risk, and readers should perform their own due diligence.
FinOracleAI — Market View
Bitcoin’s near-term price action is likely to remain volatile following the CPI data that met expectations but highlighted labor market weaknesses. The increased probability of Federal Reserve rate cuts provides a bullish backdrop, potentially driving BTC toward the $115K level and beyond. However, the risk of a short-term pullback to shake out late entrants remains significant, as indicated by liquidity patterns and historical CPI-related price behavior. Market participants should monitor key support at $113,500 and resistance near $117,000, as well as upcoming Fed communications, to gauge momentum.
Impact: Positive
