Crypto news

This coming Wednesday, August 12, the release of July U.S. inflation statistics will determine the trajectory of Bitcoin's movement over the coming weeks. This data will be the key trigger for the Federal Reserve's decision on interest rates in September. Whether the leading cryptocurrency can hold above the $70,000 mark or whether we face another wave of correction depends directly on that verdict.

The labor market has already signaled

Weak non-farm payroll data has significantly adjusted market expectations. The July report showed a loss of 23,000 jobs, although the consensus forecast had predicted growth. The unemployment rate, meanwhile, fell to 4.1%. However, a far more alarming signal was the revision of May and June data—a cumulative deterioration of roughly 103,000 jobs. This is not a one-off glitch but a sustained trend of a cooling labor market.

Following the release of these figures, the probability of a September rate hike collapsed from 55% to 41%. The market is clearly pricing in a softer stance from the regulator. Nevertheless, the final verdict will be made precisely based on the fresh consumer price data.

Three scenarios for the market

The consensus forecast suggests July inflation will come in at around 3.4% year-over-year, with a core reading of about 2.2%. However, there are additional risks tied to volatility in oil prices. After the June decline in gasoline prices, the fuel factor is once again becoming a destabilizing force in July.

I highlight three possible scenarios for how events may unfold. If the data comes in below forecasts, bond yields will move lower, which would be a powerful catalyst for the technology sector and cryptocurrencies. If it matches expectations around 3.4%, we will see short-term volatility without a change in the overall picture. But if inflation accelerates to 3.5–3.6% or higher, the market will once again begin pricing in policy tightening, which would put pressure on risk assets.

The historical correlation here is clear. In February, April, and July, data came in below forecasts, supporting gains—Nasdaq rose more than a percent after the July report, and Bitcoin climbed from $62,000–63,000 to above $64,000. Conversely, on May 12, when inflation exceeded expectations, yields surged and cryptocurrencies came under pressure.

My view on the balance of forces

I consider the most likely baseline scenario to be data matching the consensus, but the market may read it negatively. To fully remove the threat of a rate hike, two consecutive months of declining inflation are needed—both in August and September. That is too optimistic a scenario for the current macroeconomic situation.

As for Bitcoin, I view the current rebound as a false breakout. Accumulation of liquidity from above, a return of local confidence, and then a fresh wave of decline toward $60,000 and lower—that is the scenario that looks more realistic under strong pressure. My recommendation is to remain cautious and avoid opening aggressive long positions until there is full clarity on the Fed's monetary policy.