Key Takeaways

• US July CPI inflation rate fell to 2.9%, below the expected 3%, potentially triggering a Fed rate cut.
• Analysts project Bitcoin could reach $64,000 to $65,000 if the Fed cuts rates in September.

The US Consumer Price Index (CPI) numbers came out this morning, with the July CPI inflation rate falling to 2.9%, below expectations of 3%. Industry experts believe that a rate cut in September becomes more likely, and this could lead to a sustained rally for Bitcoin (BTC) to the $65,000 price level.Meanwhile, the Core CPI inflation, which excludes food and energy, aligned with 3.2% expectations. Notably, this is the first month when CPI inflation has fallen below 3% since March 2021.

“Overall the disinflation trend, visible since Q2 this year, is intact. It is especially impacting the past drivers of strong inflation, namely Services, such as energy and shelter. ‘Supercore’ services inflation (the metric monitored and quoted many times by Fed Chair Powell) was 2% on a 3m3m SAAR basis in July, down from 3.9% in June and 6.2% in May,” Aurelie Barthere, Principal Research Analyst at Nansen, shared with Crypto Briefing.

Barthere added that this is a sharp deceleration, which leaves the Fed free to cut rates this year. Although future markets expect a 100 basis points (bps) cut by December, Nansen analysts are more keen on the idea of three 25bps cuts, or one single cut of 75bps this year.Nevertheless, it all depends on real growth data showing no signs of sharp weakening.

“Inflation is no longer the main worry for the Fed or markets, real growth is now at the forefront. For equities and crypto to recover further, more good news around the US real economy, especially the consumer, are needed,” Barthere explained.

Positive impacts on BitcoinMoreover, Bitfinex analysts shared a note with Crypto Briefing where they believe a September rate cut would reinforce the bullish outlook for Bitcoin and other risk assets.

“This expectation of a rate cut could lead to a sustained rally in both the cryptocurrency market and related ETFs as investors seek to capitalize on a more accommodative monetary policy,” said the analysts.

Additionally, as inflation concerns ease, the market could see a surge in liquidity as investors anticipate lower interest rates. This generally makes speculative assets more attractive, Bitfinex analysts pointed out. As a result, the prospect of a rate cut becoming more tangible could propel Bitcoin to the range between $64,000 and $65,000, which is a key resistance level previously influenced by short-term whale activity.

“If the market perceives the CPI data as a green light for the Fed to cut rates, Bitcoin could break through this resistance, triggering a bullish trend. However, if whales begin selling as the price approaches this critical level, we might see some temporary selling pressure before any sustained breakout,” concluded Bitfinex analysts.

In July, Bitcoin’s price approached $65,000 as US stock markets recovered from significant downturns, influenced by macroeconomic indicators like the PCE Index.Last month, Bitcoin surged to $66,400 after April’s CPI data showed a decrease in inflation pressures, raising hopes for a Federal Reserve rate cut in September.Last month, Bitcoin reached $66,000 as a result of softer-than-expected US inflation data and sluggish retail sales in April, motivating analysts to foresee a potential rise to $84,000.Earlier this year, Bitcoin rebounded to near $65,000 as investors anticipated the impact of forthcoming Federal Reserve decisions on the crypto market.In March, Bitcoin whales acquired over $1.2 billion in BTC during a market dip, helping to quickly restore its price to $65,000 and stirring anticipation for the upcoming halving event.