CPI Leaves Room for Multiple Rate Cuts in 2025. Crypto Up?
Bitcoin Bounces Inside Parallel Channel. New ATH Next?
Bitcoin managed to reclaim the barrier at $112K earlier this week, after Wednesday’s Producer Price Index (PPI) release, which surprisingly fell below expectations. Last month’s PPI was a catalyst for volatility as well but it surprised to the upside, diminishing the chances of a rate cut by the Fed in September. The story was different this time, as the PPI posted a -0.1% value, while the forecast was +0.3% and the previous was +0.7%.
Before Thursday’s Consumer Price Index (CPI) release, the CME FedWatch tool indicated a 92% probability of a 25-bps rate cut in September and an 8% probability of a 50-bps cut. The chances for another 25-bps cut in October were standing at 72.6%. Lower interest rates are usually beneficial to risky assets such as cryptocurrencies.
The Core CPI posted a 0.3% increase, in line with expectations, and showed that inflation in the U.S. is somewhat tame. The yearly CPI came in at 2.9% (previous 2.7%), also as expected. After the release, the chances of a half-point rate cut increased to 11.3% from 8%. The inflation numbers, together with last week’s dismal NFP report, all but ensure a September rate cut.
During mid-week trading, Bitcoin managed to surpass $116K, which is important because, according to CoinGlass data, about $700 million worth of shorts are at risk of being liquidated at $117K. When short trades are closed due to margin calls or stop losses, they automatically turn into longs (a sell is closed with a buy, and a buy is closed with a sell). If a large amount of sell trades are suddenly closed, this usually results in the price of the asset going higher due to the large amount of buy orders.
The altcoin market went higher as well, with Binance Coin (BNB) posting an All-Time High (ATH) at $907. Other notable climbers were Solana (SOL) with almost 8% gains in the last 7 days and Dogecoin (DOGE) with almost 16% over the same period.
Chart Analysis – BTC/USD
The Bitcoin bulls scored a major victory by pushing the price above $112K, which was a very important level in the recent period. The lower boundary of the parallel channel seen on the chart is intact and rejected price after a series of bounces. This indicates that the next destination may be the upper boundary of the channel, which would mean that Bitcoin is about to make a new ATH.
The RSI is above its 50 level and climbing, while volume is steady and increasing in the last few days. This shows a healthy market, with a bullish bias. But keep in mind that Bitcoin can turn on a dime and is prone to strong reactions to news or rumors coming from the macroeconomic and political scene.
