Inflation Shockwave Hits Bitcoin: Can the Bull Run Survive?
Bitcoin's rally faces its first real test as inflation data rattles markets.
Macro Tremors Shake Crypto
Fresh CPI numbers just dropped—and traders aren't happy. The digital gold narrative gets dented as traditional finance indicators flex their influence over crypto valuations.
Liquidity Exodus or Buying Opportunity?
Watch for leveraged positions unwinding across exchanges. Meanwhile, OGs are whispering about 'discount SATs' while Wall Street hedgies pretend they never liked blockchain anyway.
This ain't your 2021 bull market—today's volatility cuts both ways. Either Bitcoin proves its inflation hedge thesis, or we get another masterclass in 'macroeconomic gravity' from the suits who still control the money printers.
As the new week commenced, Bitcoin
$115,409 experienced a 2% decline, plunging down to $115,000. Ethereum
$4,280 followed suit with a 3.33% drop to $4,272. After hitting an all-time high of $124,350 on Wednesday, the main factor disrupting Bitcoin’s upward momentum was the inflation data from the United States, which exceeded expectations. The “Crypto Fear and Greed” index by CoinMarketCap stands at 56, indicating a neutral sentiment in the market.
Inflation Surprise Undermines Risk Appetite
Vincent Liu, CIO of Kronos Research, attributed the downturn to heightened caution due to unexpectedly high inflation data. Producer Price Index (PPI) for July ROSE annually by 3.3%, swiftly curbing the rally ignited by previously soft Consumer Price Index (CPI) numbers. Federal Reserve rate cut expectations diminished, the dollar strengthened, and risk aversion heightened. Analysts emphasize that hopes for a rate cut in September have been dashed.
According to Liu, investors are waiting for clearer signals on both the macroeconomic and cryptocurrency fronts. Unemployment Claims data, set to be released on August 21, is observed as a key determinant for short-term direction.
Furthermore, confidence was shaken by U.S. Treasury Secretary Scott Bessent’s declaration that no strategic reserve Bitcoin acquisitions would occur and current holdings would be retained. Bessent noted that budget-neutral options for reserve expansion would be evaluated, indicating that state-driven demand for Bitcoin is currently off the table.
Rachael Lucas, an analyst at BTC Markets, highlighted that flows in spot ETFs indicated relocation rather than an exodus. On Friday, Grayscale and Ark Invest witnessed outflows from their Bitcoin ETFs, while BlackRock’s IBIT product continued attracting net inflows. SoSoValue data indicated a similar trend in spot ethereum ETFs, suggesting consolidation in lower-cost products while institutional interest persists.
Key Support Levels for Bitcoin: $115,000 and $112,500
On the technical side, Lucas identified the $115,000 and $112,500 zones as crucial support levels. She warned that a sustained breach below these levels might pose risks toward $110,000.
The next significant trigger in the cryptocurrency market is expected to be the Jackson Hole Symposium. Fed Chairman Jerome Powell’s dovish messages could boost risk appetite. According to Lucas, ongoing ETF inflows and institutional capital provide a foundational underpinning for pricing.
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