Crypto news

This week, the crypto market is frozen in anticipation: the release of US inflation data for July, scheduled for August 12, could be a key trigger for Bitcoin's movement. It is this report, not individual statements from officials, that will determine whether the Federal Reserve decides to raise the key interest rate as early as September. This decision will directly determine whether the first cryptocurrency can hold above the $70,000 mark or whether we will see another wave of correction.

The labor market has cracked

The starting point for revising expectations was a recent statement by Fed Chair Jerome Powell about readiness to tighten monetary policy if inflation accelerates. However, fresh employment statistics have made serious adjustments to these plans. In July, the US economy lost 23,000 jobs, although the market expected growth, while the unemployment rate fell to 4.1%. A far more alarming signal was the large-scale 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 sustained trend of a cooling labor market.

The market reaction was swift: the probability of a September rate hike collapsed from 55% to 41%. The weak employment report has already dampened hawkish sentiment, but the final verdict will be delivered by consumer price statistics.

Three scenarios for Bitcoin

The consensus forecast for July inflation is around 3.4% year-over-year, with a core reading of approximately 2.2%. However, I see three fundamentally different scenarios for how events could unfold:

• Inflation below forecast. Bond yields will move lower, which would be a powerful catalyst for the technology sector and cryptocurrencies. In this case, Bitcoin would get a chance for a confident push above $70,000.

• The figure is in line with expectations (around 3.4%). The market will likely react with short-term volatility without changing the overall picture. The chances of a September hike will remain balanced, and Bitcoin will continue to consolidate.

• Acceleration to 3.5–3.6% and higher. This would bring tightening expectations back to the market, yields would rise, and both technology stocks and cryptocurrencies would come under pressure. In this scenario, Bitcoin risks testing the $60,000 zone and below.

The oil factor and the balance of power

An additional risk is tied to oil. The sharp slowdown in gasoline prices in June provided a temporary respite, but by July the fuel factor had become unstable again. Geopolitical tensions in the Middle East, including complex negotiations over the Strait of Hormuz, have brought Brent back to the $83 area, while WTI is consolidating above $75. Rising energy prices could push inflation higher, which would be the worst combination for the regulator: raising rates amid a weak labor market is dangerous, but ignoring rising prices is impossible.

The historical correlation here is obvious: when inflation data came in below forecasts, as in February, April, and July, markets rose — the Nasdaq gained more than one percent, and Bitcoin climbed from $62,000–63,000 to above $64,000. Conversely, on May 12, when inflation exceeded expectations, yields soared and cryptocurrencies came under pressure.

My forecast: the base scenario assumes data matching the consensus, but the market may read it negatively, since removing the threat of a rate hike requires sustained inflation declines in both August and September. In the short term, I expect elevated volatility in both stocks and cryptocurrencies, with it being more pronounced in the equity market. Bitcoin will likely first test resistance around $65,000, but without a convincing decline in inflation, holding above will be difficult. Investors should prepare for swings and avoid opening large positions until the data is released.