Bitcoin has regained attention in the financial markets as recent U.S. inflation data has heightened expectations of a Federal Reserve rate cut, leading to a surge in risk assets. The latest Consumer Price Index (CPI) data shows inflation remaining steady at 2.9% year-over-year, prompting analysts to speculate that Bitcoin could be approaching a new price discovery phase, with a potential goal of reaching an all-time high of around $140,000.
Meanwhile, the Core CPI, which excludes food and energy costs, has risen to 3.1%, marking the highest increase since February. Additionally, weekly unemployment claims have surged to 263,000, which is the highest level observed since October 2021. These economic indicators have led experts to predict a 25-basis point cut in interest rates by the Fed during its upcoming meeting, with further cuts expected in October and December.
The market is now pricing in a significant likelihood of these rate cuts, particularly ahead of the Federal Reserve’s meetings scheduled for September 16–17, where the probabilities have shifted to an 84% chance of a 25 basis point reduction. With this potential shift towards a more accommodative monetary policy, Bitcoin could see increased interest as lower interest rates typically result in cheaper financing, making risk assets like cryptocurrencies more appealing. Historically, Bitcoin has experienced significant rallies in response to a favorable monetary policy environment.
Market analysts have drawn parallels to the Fed’s rate cuts in March 2020, which initially caused panic and a sharp decline in crypto markets. However, following those cuts, Bitcoin rebounded impressively from around $5,000 to nearly $69,000 within a year. Currently, Bitcoin has seen fluctuations following the CPI release, briefly reaching above $114,500 before experiencing a downturn, highlighting persistent inflation concerns. Some speculate that Bitcoin may initially retest the $105,000 to $107,000 range before launching toward a new high.
Technical analysis indicates that Bitcoin is breaking out of a descending channel, with significant bullish signals emerging from its momentum indicators. A recent MACD bullish crossover, the first since April, suggests a potential trend reversal could be underway. Historical patterns associated with similar signals have led to significant price increases in the past, making analysts optimistic about reaching or exceeding $140,000. More aggressive price targets from certain analysts even project values between $200,000 and $250,000.
In summary, as Bitcoin navigates the implications of U.S. inflation dynamics and potential Fed actions, technical indicators reveal bullish trends, setting the stage for what could be a significant bullish phase in the cryptocurrency’s market trajectory. Traders remain advised to watch key support zones as Bitcoin aims to consolidate its gains and embark on a new upward movement.
