Bitcoin edged lower toward the $63,700 area on Thursday, slipping despite a U.S. inflation report that broadly matched economists’ expectations and initially eased bets on tighter Federal Reserve policy. The move underscored how quickly crypto risk appetite faded after the data, with traders focusing on what the inflation print does—and does not—change about the Fed’s September path.
Bitcoin was down less than 1% on the day at last check, while alternative cryptocurrencies generally underperformed.
Key takeaways
- Price move: Bitcoin slipped toward $63,700, with gains from the initial post-data reaction unable to hold.
- Catalyst: July U.S. CPI came in largely in line with forecasts, tempering immediate concerns about another Fed rate hike.
- Market implication: The report reduced the odds of a September increase, but traders still lacked a clear policy direction, keeping volatility elevated—particularly for crypto.
- Next focus: Attention is shifting to upcoming Fed commentary and the next set of labor and inflation data releases.
What drove the move
The selloff in Bitcoin followed the release of July’s U.S. Consumer Price Index, which largely matched market expectations. Headline inflation rose 0.1% month over month and 3.4% year over year, while core inflation—excluding food and energy—climbed 0.2% on the month and eased to 2.5% on an annual basis.
According to futures markets cited in the report, expectations for a September rate hike fell to about 38% from 46% prior to the CPI release. That shift helped stabilize broader markets immediately after the data hit, with gold up 1.3% and Bitcoin briefly higher.
However, the initial relief appears to have been outweighed by positioning already established ahead of the print. In an email to Invezz, Maksym Sakharov, co-founder and CEO of debanking infrastructure provider WeFi, said the softer inflation reading is “welcome” because it gives the Fed “more breathing room,” but warned that one CPI release is unlikely to settle the debate around the inflation outlook given “pre-built volatility.”
The report also pointed to details within CPI that could help keep policymakers patient. Shelter costs rose only 0.1%, while energy prices fell 1.5% and gasoline dropped 2.9%. It further noted that some goods categories may be moving beyond earlier tariff-driven price increases.
Market reaction and why crypto faded
Shortly after the inflation data, markets displayed a typical risk-sensitive response: gold and parts of crypto traded higher and U.S. stock index futures moved slightly up. Yet the follow-through was limited. Bitcoin’s rebound did not extend, and altcoins recorded larger losses during the same period.
According to the same Invezz reporting, the key reason may have been leverage and the speed with which traders reposition after macro catalysts. Sakharov’s view, as quoted in the article, was that the “first market move” reflects leverage more than conviction, and that CPI-driven volatility can continue until the Fed lays out a more consistent policy path.
For investors, the implication is that even “in-line” inflation prints can produce whipsaw outcomes when derivatives positioning is crowded and the data only partially resolves uncertainty about the policy trajectory.
What analysts expect next
With CPI failing to deliver a decisive signal, the report indicated that investors will look to other scheduled events to determine whether the Fed can stay on course without raising rates again.
- Jackson Hole (later in August): Investors will watch for additional clarity on policymakers’ economic outlook and the likely direction of interest rates.
- U.S. employment report (September 4): A fresh read on labor-market conditions could shift expectations for monetary policy.
- Next inflation release (September 11): Another CPI print will likely be used to validate—or challenge—the current inflation trend.
The article added that unexpected weakness in employment or inflation could improve expectations for looser monetary policy, which would generally be supportive for risk-sensitive assets such as Bitcoin.
Technical picture: bearish momentum persists
Separately from macro drivers, the article flagged ongoing downside pressure from Bitcoin’s technical setup. It described the Bitcoin/US dollar four-hour chart as bearish, citing trading below key moving averages and bearish signals from indicators.
According to the reported technical read, the Relative Strength Index at 42 remains below the neutral 50, suggesting increasing downside control. The article also said the Moving Average Convergence Divergence lines are in negative territory, reinforcing the bearish bias.
On levels, the report suggested that if selling continues, Bitcoin could test the $63,000 area and potentially retest the August 3 swing low of $62,185. It also highlighted a deeper downside scenario tied to the July 6 low of $61,228, with a separate demand zone noted at $57,659. On the upside, it pointed to a potential rebound above a four-hour “Inducement Liquidity” level at $64,430, followed by a resistance and “TLQ” zone at $65,423.
Investors will likely weigh these technical thresholds alongside incoming macro developments, especially any signals from Fed officials that change how markets price the timing and likelihood of future rate decisions.
What to watch next: Traders will be monitoring Jackson Hole commentary for clearer guidance on the rate path, with the U.S. employment report on September 4 and the next CPI release on September 11 likely to be key catalysts for both broad risk sentiment and Bitcoin’s direction.
