Bitcoin faces key test below $120K after sticky CPI print

The key takeaways

• Data from the June CPI indicated that headline inflation and core prices were rising. This reduced expectations about a July interest rate cut.

• Bitcoin must reclaim the $119,250–$120,700 zone to confirm bullish momentum and aim for fresh highs above $123,000.

BitcoinBTCThe price of the. rose to $118.400 on Tuesday from $16,500. release The US Consumer Price Index for June showed that inflation was rising for the second consecutive month. The headline CPI reached 2.7% over the past year, which was higher than expected but still below expectations. The core CPI was also slightly higher at 2.9%, but it fell short of expectations (3%). The overall CPI increased by 0.3%, which is the largest gain since five months. Core inflation rose by 0.2%.

Data shows that the inflation rate is still high, particularly in certain segments such as food and transport, while housing prices are only slightly lower. The markets reacted with caution, as the US Dollar Index (DXY), which measures inflation, rose sharply to 98.5 in July, an increase of 2.1%. 

Bitcoin’s near-term prospects are met with mixed reactions. Core figures were expected and provided some relief. However, the rising inflation headlines dampened any hopes for a pivot to dovish policy at July’s Federal Open Market Committee. According to CME FedWatchFutures still indicate a 54.3% likelihood of a reduction in September, and this could be confirmed by the Producer Price Index (PPI), which was released last week.

Bitcoin could regain its control if the PPI is softer than anticipated. If the PPI is hotter than expected, it could lead to another decline between $115,000-$110,000. 

Bitcoin’s position in the broader upward trend is solid, although macroeconomic uncertainty persists. However, this week’s data may determine whether or not Bitcoin will make a breakthrough.

Related: Bitcoin speculators’ record cost basis boosts $100K support as BTC dives

Watch out for these Bitcoin key levels

The new annual high is $123,218, Bitcoin The market retraced dramatically to $116.500, which was a sweeping reversal. This move will neutralize overleveraged position, and reset the market.

The key area for bulls to claim is between $119.250 – $120.700. This was an area where the sell-side had imbalanced the market, with aggressive sellers pushing the price down and leaving unfilled purchase orders. This range is the key to a new bullish trend and a fresh peak beyond $123,000.

In the short-term, however, it appears that a more severe correction will be likely. Bitcoin might revisit the fair-value gap between $113.700 to $115.300. The zone lies along the 200 day EMA and offers dynamic support. If the price bounces back here, it would help support the continuation in the uptrend. BTC could retest its former high of $112,000 if selling pressure increases.

The long-term structure of the market indicates that any dips in Bitcoin are likely to be good opportunities for investors. Magus, the crypto trader noted X is the BTC that’s around the $117,000 mark. “gift,” Underlining the strength of the rally. 

Jelle, an anonymous investor expected BTC will chop its position between $116,000 to $118,000, before it regains a place above $120,000. 

Related: Bitcoin price drop to $114K possible as BTC whales take profits

This article contains no investment recommendations or advice. Risk is inherent in every investment decision and trade. The reader should always do research prior to making a final decision.