Bitcoin’s key test is under $120K after sticking CPI print

The key takeaways

• Data from the June CPI indicated that headline inflation and core prices were rising, which reduced expectations of 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.

BitcoinBTCPrice rose from $16,500 to $118.400 after the Tuesday’s announcement. release Inflation was up for a second month in a row according to the US Consumer Price Index. Headline CPI was 2.7%, up from the 2.4% of May, and the highest level since February. This is in line with expectations, but higher than 2.4%. The core CPI was also slightly higher at 2.9%, but it fell short of expectations (3%). Overall CPI has increased 0.3% in the last month, marking its sharpest increase since May, while core inflation is up 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 outlook is mixed. Core figures were expected and provided some relief. However, the rising inflation headlines dampened any hopes for a pivot to the dovish side at July’s Federal Open Market Committee. According to CME FedWatchThe Producer Price Index data for this week could confirm that the futures prices still favour a 54.3% probability of a cut in September.

Bitcoin could regain its control if the PPI is softer than anticipated. A hotter PPI could cause another drop between $115,000 to $110,000. 

Bitcoin is well-positioned to continue its upward trend, despite macroeconomic uncertainties. This week’s numbers could determine whether Bitcoin makes a break or a breakdown.

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

Watch out for these Bitcoin key levels

In the wake of a record-breaking year, $123,218, Bitcoin The market retraced dramatically to $116.500, which was a sweeping retracement. This move reset the market by neutralizing overleveraged position.

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 orders. If bulls can break out above the range, they will be able to open up new highs in excess of $123,000.

A deeper correction is more likely in the near term. Bitcoin may revisit the gap in fair value between $113.700 and $115.300. This zone is aligned to the 200-day EMA which provides dynamic support. If the price bounces back here, it would help support the continued upward trend. BTC could retest its former high of $112,000 if selling pressure increases.

Crypto trader Magus says that despite short-term fluctuations, long-term trends indicate all Bitcoin drops are buy-in opportunities. Magus, the crypto trader noted On X, BTC is around $117,000 “gift,” The rally’s current strength is highlighted. 

Jelle, an anonymous investor expected BTC is expected to cut between $116,000-$118,000 before it can reclaim a position over $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.