Bitcoin price has surged to a new record high above $124,000, driven by the increasing likelihood of a Federal Reserve rate cut in September and bolstered by the latest U.S. Consumer Price Index (CPI) data.
According to data from crypto.news, Bitcoin (BTC) has seen a remarkable 8.5% increase in the past week, reaching $124,128 on Friday morning in Asia. Although the price has slightly dipped to $123,197 at the time of writing, it still represents a significant 32% gain since the beginning of the year and a remarkable 62% increase from its year-to-date low.
The surge in Bitcoin’s value came on the heels of the U.S. CPI report for July, which showed that annual inflation remained steady at 2.7%, matching the rate from June and falling slightly below the projected 2.8% increase. Additionally, the report indicated a modest 0.2% month-on-month rise in overall consumer prices, a slight decrease from the 0.3% uptick seen in June.
Market expectations of a Federal Reserve interest rate cut in September have soared to 95.8% following the release of the CPI data, as indicated by the CME FedWatch tool. A potential rate cut could lead to lower borrowing costs and increased liquidity, prompting investors to seek higher returns in riskier assets like cryptocurrencies.
Inflows into spot Bitcoin and Ethereum ETFs have also played a significant role in fueling Bitcoin’s rally to new all-time highs. Data from SoSoValue reveals that spot BTC ETFs have attracted over $1 billion in net inflows over the past five trading sessions, while Ether ETFs pulled in around $1 billion in a single day, sparking bullish sentiment across the crypto market.
The recent surge in Bitcoin’s price has also been accompanied by a wave of short liquidations, particularly in the $124,000–$126,000 range, as traders who had bet against the rally were forced to close their positions. This short covering likely contributed to the upward momentum during the price surge.
Looking at the BTC liquidation heatmap from CoinGlass, there is a notable concentration of long liquidation levels around the $120,000–$121,000 range. A retracement to this zone could trigger further selling pressure, potentially accelerating a downside move.
On the technical side, Bitcoin appears to have formed an ascending parallel channel pattern on the 4-hour chart, signaling a continuation of the uptrend. The price is currently retracing after touching the upper boundary of the channel, with a potential move towards $120,500 expected. If BTC finds support at this level, it could rebound towards $127,000 in the next leg higher, staying within the channel.
The bullish crossover of the 50-day moving average above the 200-day moving average further supports the positive momentum in Bitcoin’s trend, reinforcing the upward bias.
In conclusion, Bitcoin’s rally to new all-time highs has been driven by a combination of factors, including the potential for a Federal Reserve rate cut, strong inflows into spot ETFs, and technical patterns indicating a continuation of the uptrend. As always, investors should exercise caution and conduct thorough research before making any investment decisions.