US inflation report will decide bitcoin's fate: August 12 is the key date of the month
The cryptocurrency market is holding its breath: the release of US inflation data for July, scheduled for August 12, will be a defining event for bitcoin. This report will show whether the Federal Reserve will decide to raise the key rate in September, and whether the first cryptocurrency can consolidate above the $70,000 mark.
The labor market is cooling, rates are in question
Fresh employment statistics have already adjusted investor expectations. The US economy lost 23,000 jobs in July, although the market had forecast growth, and unemployment fell to 4.1%. However, the key signal is the revision of data for May and June: the cumulative deterioration amounted to about 103,000 jobs. This is not a one-off glitch, but a steady cooling of the labor market.
After the report was published, the probability of a September rate hike fell from 55% to 41%. For the Fed, this creates a difficult dilemma: a weak labor market combined with high inflation is the worst-case scenario, where raising rates is dangerous for the economy, yet ignoring rising prices is impossible.
Three scenarios for bitcoin
The consensus forecast for July inflation is about 3.4% year-over-year with a core reading of 2.2%. However, the risks are tied to oil: a sharp slowdown in June drove gasoline prices down, but by July the fuel factor had become unstable again.
I highlight three key scenarios. If the data comes in below the forecast, bond yields will decline, giving a powerful boost to the technology sector and cryptocurrencies. If it matches expectations, the market will face short-term volatility without a trend change. But if inflation accelerates to 3.5–3.6% or higher, yields will rise, and both tech stocks and digital assets will come under pressure.
The historical correlation is obvious: in February, April, and July, data below the forecast supported markets — after the July report, the Nasdaq rose by more than one percent, and bitcoin climbed from $62,000–63,000 above $64,000. At the same time, on May 12, when inflation exceeded expectations, cryptocurrencies came under a wave of selling.
My view on the balance of power
In my view, the base case is that the data matches the forecast, but the market will read it negatively. To remove the threat of a rate hike, sustained inflation declines are needed in both August and September. Until then, bitcoin will remain in a zone of uncertainty.
As for the current bounce, I interpret it as a false rally. There is liquidity accumulation from above, a return of local confidence, and then a subsequent wave of decline toward $60,000 and lower under strong selling pressure. I will also note the oil factor: Brent has returned to $83, WTI is consolidating above $75, and on a pullback to $74, I am considering opportunities for long positions with an expectation of an 8–10% move. Overall, until the August 12 report is released, the market faces heightened volatility, and it will be more pronounced in the stock market than in cryptocurrencies.