July inflation in the US will decide the fate of Bitcoin: why August 12 is the key date of the month
The release of US inflation data for July, scheduled for August 12, will be the main macroeconomic trigger for the cryptocurrency market. This report will directly determine whether the Federal Reserve decides to raise the key interest rate in September, and whether Bitcoin can hold above the $70,000 mark.
The focus is on the July Consumer Price Index (CPI), due out on Monday. The market has already priced in certain expectations, and any deviation from the consensus could trigger sharp movements in both traditional assets and digital currencies.
The labor market has cracked
The starting point for analysis is the recent statement by Fed Chair Jerome Powell, who made it clear that if inflation accelerates, a rate hike in September is almost guaranteed. However, fresh employment data has adjusted this scenario. The US economy lost 23,000 jobs in July, although the market had expected growth. The unemployment rate fell to 4.1%, but the key signal was the revision of data for May and June—a cumulative deterioration of about 103,000 jobs.
This is not about an isolated weak month, but a sustained cooling of the labor market. After the report was published, the probability of a September rate hike collapsed from 55% to 41%. This is a powerful signal for risky assets, including Bitcoin.
Three scenarios for CPI
The consensus forecast for July inflation is around 3.4% year-over-year, with a core reading of 2.2%. An additional risk is tied to oil: after the slowdown in gasoline prices in June, the fuel factor became unstable again in July. I see three main scenarios for how things could unfold:
• Below forecast. Bond yields will move lower, providing support to the technology sector and cryptocurrencies. This is the most bullish scenario for Bitcoin.
• In line with expectations (around 3.4%). Short-term volatility without changing the overall picture. The odds of a September hike will remain balanced, leaving the market in a state of limbo.
• 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.
The worst combination for the regulator is a weak labor market coupled with high inflation. Raising rates under such conditions is dangerous for the economy, but ignoring rising prices is impossible. The historical correlation is obvious: in February, April, and July, data came in below forecasts, supporting markets—after the July report, the Nasdaq gained more than a percent, and Bitcoin jumped from $62,000–63,000 to $64,000. Conversely, on May 12, when inflation exceeded expectations, yields soared and cryptocurrencies came under pressure.
My forecast and the balance of power
The base case is that the data will match expectations, but the market will read it negatively, because eliminating the threat of a rate hike requires inflation to decline in both August and September. This week, it is also worth watching oil: Brent has returned to $83, while WTI is consolidating above $75. Geopolitical tensions in the Middle East persist, adding to the risks.
As for Bitcoin, I view the current bounce as a false rally. Liquidity accumulation at the top, the return of local confidence, and then a new wave of decline toward $60,000 and below is a likely scenario under strong pressure. I have already closed my long from $58,000 and am considering a short in the $65,000 area, awaiting confirmation of seller pressure. From Monday through Wednesday, before the CPI release, I expect elevated volatility in both stocks and cryptocurrencies, with it being more pronounced in the equity market.
My professional opinion: August 12 will be a bifurcation point for the market. If inflation surprises to the downside, Bitcoin will get a chance to break toward $70,000. But if inflationary risks are confirmed, the correction in digital assets could be deeper than most market participants expect.