July inflation in the US will decide the fate of Bitcoin: why August 12 will become a point of bifurcation
August 12 is not just another date on the economic calendar. The release of U.S. inflation data for July will be the very trigger that determines the trajectory of Bitcoin's movement over the coming weeks. The question is stark: can the leading cryptocurrency hold above $70,000, or will we see a deep correction toward $60,000 and below?
The labor market has cracked
A key signal has already been received. Fresh U.S. employment statistics have dramatically shifted the balance of power. Instead of the expected job growth, the American economy lost 23,000 positions in July, and unemployment fell to 4.1%. However, the most alarming part is the massive revision of May and June data: the combined deterioration amounts to about 103,000 jobs. This is not a one-off glitch but a sustained cooling of the labor market.
The market reacted instantly: the probability of a September Fed rate hike collapsed from 55% to 41%. Interestingly, not long ago, Fed Chair Jerome Powell had signaled that if inflation accelerated, a September rate hike was almost guaranteed. Now the pendulum has swung in the opposite direction.
Three scenarios for inflation
The consensus forecast for July inflation is around 3.4% annualized, with a core reading of 2.2%. But this is where the main intrigue lies. I see three possible scenarios for how events could unfold:
• Below forecast. Bond yields will head lower, and the technology sector and cryptocurrencies will receive the most positive boost. This is a bullish signal for Bitcoin.
• Within expectations (around 3.4%). Short-term volatility without a change in the overall picture. The odds of a September hike will remain balanced.
• Acceleration to 3.5–3.6% and above. The market will return to tightening expectations, yields will rise, and expensive tech stocks and cryptocurrencies will come under pressure. This is the most negative scenario.
A particularly dangerous combination is a weak labor market paired with high inflation. For the regulator, this is a trap: raising rates is risky for the economy, but ignoring rising prices is impossible. The historical correlation here is clear: in February, April, and July, data below forecasts supported markets — the Nasdaq rose, and Bitcoin climbed from $62,000–63,000 above $64,000. But on May 12, when inflation exceeded expectations, yields spiked, and cryptocurrencies came under severe pressure.
Oil, SpaceX, and the balance of power
Geopolitics should not be dismissed either. The situation in the Middle East remains explosive: negotiations between the U.S. and Iran have hit a dead end, and Tehran is working with Oman on a plan regarding the Strait of Hormuz. Oil has already reacted with gains — Brent has returned to $83, and WTI is consolidating above $75. A sharp jump in energy prices could stoke inflation, adding pressure on the Fed.
The situation around SpaceX also deserves attention. The company's shares rebounded sharply after a two-day decline, despite about 911 million unlocked shares hitting the market. The reason is a strong report with quarterly revenue of $7.8 billion, although capital expenditures of $18.4 billion and negative free cash flow leave questions. The space segment is unprofitable, and only Starlink provides stable cash flow. I expect the next wave of unlocks 70 days after the IPO to put pressure on the stock, and a correction of 10–15% into the $108–114 zone looks quite likely.
My view on Bitcoin
I view the current Bitcoin bounce as a false rally. Liquidity accumulation at the top, the return of local confidence — these are all classic signs before a new wave of decline. If inflation data on August 12 turns out weak, we could see an attempt to attack $65,000, but with strong selling pressure, the target of $60,000 and below remains in play. Until the data is released, I expect elevated volatility in both stocks and cryptocurrencies, with the stock market showing more pronounced moves.
My professional advice: do not give in to euphoria from the current bounce. Wait for the inflation data — this will be the moment of truth that sets the market direction for all of September. Manage your risks and do not open large positions before the report is released.