Bitcoin at a Crossroads: Will US CPI Data Shatter Key Support or Spark a Rally?

Bitcoin's price teeters on a knife-edge as macroeconomic headwinds gather—here's what traders are watching.

The CPI Factor: Today's US inflation data could make or break BTC's fragile support level. Markets hold their breath.

Technical Tightrope: That $XX,XXX level isn't just psychological—liquidity pools below suggest violent moves either way.

Wall Street's Waiting Game: As usual, traditional finance will 'discover' crypto volatility only after their algos trigger the cascade. Stay nimble.

Key Insights:

• Matrixport shared $116,817 as the key support level in its Bitcoin price prediction as sentiment tanked.
• Hot Core CPI inflation kept investors at bay, with inflows into Bitcoin funds slowing.
• Bearish technical patterns, such as a double top at $122K emerged for Bitcoin price.

Bitcoin bulls failed to hold above $122K and reversed gains to fall below $119K after selloffs due to macroeconomic factors. Bitcoin price prediction by analysts pointed out a major fall if it breaks below the key level at $116.8K.

Moreover, the concerns over rising US inflation, seasonal weakness, and slowing inflows into Bitcoin investment products turned sentiment negative.

Key Support Level to Watch as Bitcoin Price Tanked

Crypto research firm Matrixport highlighted $116,817 as the key support level in its Bitcoin price prediction on August 12. BTC price’s spike above $122K after a triangle breakout was offset by selling in the European and U.S. sessions.

The firm added that a hotter-than-expected US CPI inflation print on Tuesday could put two Fed rate cuts off the table. The seasonal weakness could prompt a hindered price upside rather than a parabolic rally.

Matrixport believes patient investors will likely see more returns over the coming months. The firm cited continued capital inflows into crypto funds as the key reason to support Bitcoin’s upside move.

Bitcoin investment products saw inflows after two consecutive weekly outflows. However, the inflows slowed as institutional interest turned towards ethereum and other altcoins.

US Core CPI Spooked Investors’ Positive Sentiment

The US CPI for July came in at 0.2%, down from 0.3% in the earlier month. Moreover, the headline CPI inflation remained unchanged at 2.7% as compared to the 2.8% forecast, lower than the hotter 2.7% CPI Inflation in the prior month.

However, the Core CPI, excluding the food and energy prices, increased to 0.3% from the 0.2% print in the prior month. Also, the Core CPI on a YoY basis comes in at 3.1% for July against the expectation of 3%, but up from a 2.9% print in June.

Nick Timiraos from the Wall Street Journal claimed July CPI as the big release. Meanwhile, JPMorgan expected a gain of up to 0.75% in markets if CPI comes between 0.3% and 0.35%.

At the time of writing, the US dollar index (DXY) showed volatility and was climbing higher around 98.60. Also, the 10-year US Treasury yield was slightly higher at around 4.291% ahead of the key US CPI economic data release.

Bitcoin Price Faces Several Headwinds

Hot core CPI inflation data WOULD prompt the U.S. Federal Reserve to have more room to delay Fed rate cuts and avoid any monetary policy change amid tariff jitters.

At the time of writing, the CME FedWatch showed more than 83% probability of a Fed rate cut by 25 bps in September. However, traders anticipate two rate cuts this year.

Moreover, seasonal weakness in August historically caused bitcoin price rally to face continuous selling pressure. The $122K became a key resistance level to break for a BTC rally above $133K, as several analysts, including Ali Martinez, shared in their Bitcoin price prediction.

Meanwhile, some traders pointed out bearish technical patterns, such as the double top bearish reversal.

BTC price dropped more than 2% to trade at $118,542 at the time of writing. The 24-hour low and high were $118,159 and $122,603, respectively.

Furthermore, the trading volume dropped by 11% over the last 24 hours, indicating muted trading activity in the spot crypto market.

CoinGlass data showed huge selloffs in the derivatives market. At the time of writing, the total BTC futures open interest jumped more than 5% to $79.74 billion in the last 24 hours.

Meanwhile, 4-hour BTC futures OI on CME climbed 0.70% and fell 0.47% on crypto exchange Binance, respectively.