August 12 — a crossroads for bitcoin: the inflation report will decide the fate of the market
Next week, the cryptocurrency market will hold its breath in anticipation of a key macroeconomic trigger. On August 12, U.S. inflation data for July will be published — this report will be the main event of the month for bitcoin. It will directly determine whether the Federal Reserve decides to raise rates in September, and therefore whether the leading cryptocurrency can break through the psychologically important level of $70,000.
The labor market has already cracked
Fed Chair Jerome Powell's statement about readiness to tighten monetary policy if inflation accelerates was perceived by the market as a call to action. However, fresh employment statistics have changed the picture. In July, the U.S. economy lost 23,000 jobs instead of the expected gain, while unemployment fell to 4.1%. Far more alarming is the revision of data for May and June — the cumulative deterioration amounts to roughly 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 rate hike collapsed from 55% to 41%. A weak labor market is an argument against tightening, even if inflationary pressure persists.
Three scenarios for inflation
The consensus forecast for July inflation is around 3.4% year-over-year, with a core reading of 2.2%. However, there is an important nuance: the oil factor is becoming unstable again. In June, gasoline prices fell sharply, but by July the fuel component began to pressure the consumer price index once more.
I see three possible developments. If the data comes in below the forecast — bond yields will decline, and the technology sector and cryptocurrencies will benefit first. If it matches expectations, the market faces short-term volatility without a trend change. But an acceleration of inflation to 3.5–3.6% and above would be the worst-case scenario: yields will rise, and both expensive tech stocks and bitcoin will come under pressure.
The historical correlation here is obvious. In February, April, and July, data came in below forecasts, which supported markets — the Nasdaq gained more than a percent, and bitcoin jumped from $62,000–63,000 to above $64,000. Conversely, on May 12, inflation exceeded expectations, triggering a rise in yields and pressure on cryptocurrencies.
The balance of forces for the week
The geopolitical backdrop is also adding tension. Negotiations over the Strait of Hormuz are stalling: Iran demands the lifting of sanctions, while Washington insists on the reverse sequence. Oil has already reacted — Brent has returned to $83, and WTI is consolidating above $75. Any escalation will push prices higher, intensifying inflationary pressure.
Against this backdrop, bitcoin looks vulnerable. The current bounce is more of a false rally: liquidity accumulation from above, a return of local confidence, and then a new wave of decline toward $60,000 and lower under strong pressure. The optimal zone for entering a short position is the $65,000 area, where resistance is expected to form. From Monday through Wednesday, before the data release, volatility will be elevated in both stocks and cryptocurrencies, with it being more pronounced in the equity market.
My conclusion: the market is at a bifurcation point. Even data matching the forecast could be read negatively — to remove the threat of a rate hike, sustained inflation declines are needed in both August and September. Bitcoin will need a miracle to hold above $65,000 by the end of the month.