US inflation will decide bitcoin's fate: why August 12 is the month's key date
The release of July U.S. inflation statistics, scheduled for August 12, will be the central event for markets. This data will determine whether the Federal Reserve decides to raise interest rates as early as September. This decision directly affects whether Bitcoin can overcome the psychologically important level of $70,000.
The market is in a state of heightened uncertainty. Fresh employment data has adjusted expectations: instead of the projected job growth, the U.S. economy lost 23,000 positions in July, while the unemployment rate fell to 4.1%. However, a more alarming signal was the revision of May and June data—the combined deterioration amounted to about 103,000 jobs. This is not an isolated glitch but a sustained trend of a cooling labor market.
The probability of a September rate hike after the employment report release dropped sharply—from 55% to 41%. The consensus forecast for July inflation is around 3.4% year-over-year, with a core reading of approximately 2.2%. However, the key risk is tied to the oil factor: gasoline prices fell in June, but by July the fuel component became unstable again, which could distort the final figures.
Three scenarios for the market
The first scenario—data comes in below forecasts. In this case, bond yields will decline, and the technology sector and cryptocurrencies will receive the most positive response. The second—inflation matches expectations at around 3.4%. Then the market will likely remain in a sideways trend with elevated volatility, and the chances of a September hike will stay balanced. The third, most negative for risk assets—inflation accelerates to 3.5–3.6% and above. In this case, yields will begin to rise, putting pressure on expensive technology stocks and cryptocurrencies.
A particular challenge for the regulator is the combination of a weak labor market with high inflation. Raising rates in such a situation is dangerous for the economy, but ignoring price growth is impossible. The historical correlation is obvious: in February, April, and July, when data came in below forecasts, markets received support—Nasdaq gained more than a percent, and Bitcoin rose from $62,000–63,000 to above $64,000. At the same time, on May 12, when inflation exceeded expectations, yields surged, and cryptocurrencies came under pressure.
My baseline forecast: the data will most likely match expectations, but the market may interpret it negatively. To fully remove the threat of a rate hike, sustained inflation declines will be needed in both August and September. Otherwise, Bitcoin risks facing a new wave of correction.
This week, it is also worth paying attention to oil dynamics: Brent has returned to the $83 area, while WTI is consolidating above $75. Geopolitical tensions in the Middle East add risks. Additionally, after the recent rebound in SpaceX shares and a strong quarterly report with revenue of $7.8 billion, the market may expect a correction into the $108–114 zone. For Bitcoin, the current rebound looks like a false signal: liquidity accumulation from above and the return of local confidence could be replaced by a new wave of decline toward $60,000 and below if pressure intensifies. I expect elevated volatility until the inflation data release, with it being more pronounced in the stock market.