Bitcoin (BTC) Might Rally to $65K as US Inflation Rate Drops to 2.9%, Increasing the Likelihood of a Rate Cut in September

The latest US Consumer Price Index (CPI) report shows July's inflation rate dropping to 2.9%, just below the expected 3%. This decline has increased the likelihood of a rate cut in September, which could boost Bitcoin (BTC) to around $65,000.

The latest US Consumer Price Index (CPI) report reveals a slight decrease in inflation, with July's inflation rate dropping to 2.9%, marginally lower than the anticipated 3%. This decline has heightened the possibility of a rate cut by the Federal Reserve in September. Such a move could positively impact Bitcoin (BTC), potentially boosting its price to around $65,000.

Core CPI inflation, excluding food and energy, aligns with predictions at 3.2%. Notably, this marks the first time since March 2021 that overall inflation has fallen below 3%.

According to Nansen's Principal Research Analyst, Aurelie Barthere, the disinflation trend observed in Q2 persists, particularly evident in services, energy, and housing costs. Notably, the "supercore" services inflation rate, closely monitored by the Federal Reserve, decreased to 2% in July from 3.9% in June. This disinflation could influence the Fed's decision to cut rates this year. While markets anticipate a 100 basis point cut by December, Nansen's analysis suggests smaller cuts totaling 75 basis points.

The focus now shifts from inflation to real economic growth. Positive news on the US economy, especially regarding consumer health, is crucial for further recovery in equities and crypto.

Bitfinex analysts highlight that a potential rate cut in September could lead to a Bitcoin rally and increased interest in risk assets. Lower interest rates tend to boost liquidity and attract investors to speculative assets, which could propel Bitcoin to the $64,000-$65,000 range, a critical resistance level influenced by whale activity.

However, they caution that while a rate cut might initiate a bullish trend, large holders could sell, causing short-term volatility before a sustained rise.

In July, Bitcoin approached $65,000 as US stocks rebounded, driven by economic indicators like the PCE Index. Previously, Bitcoin hit $66,400 following positive April CPI data, sparking hopes for a Fed rate cut.

Bitcoin's recent price movements around $65,000 have been influenced by various factors, including lower-than-expected inflation and weak retail sales. In March, significant whale purchases of over $1.2 billion in BTC during a market dip quickly restored its price to $65,000, creating anticipation for the next halving event.

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