The latest U.S. inflation data has provided a boost to the markets, instilling a sense of optimism among investors. With the August CPI rising 2.7% year-over-year, in line with expectations, and the PPI cooling to 1.8% compared to the forecast of 2.1%, it indicates that underlying price pressures are easing across the economy. This data has reassured market participants that inflation is not on the rise, paving the way for the Federal Reserve to adopt a more dovish stance.
In response to this data, equities rallied, Treasury yields dipped, and crypto assets experienced a surge as traders factored in a higher likelihood of rate cuts by the end of 2025. For cryptocurrencies like Bitcoin and Ethereum, this shift in the macroeconomic environment presents a significant tailwind. Historically, liquidity injections have acted as a catalyst for crypto bull markets, and with major uncertainties now cleared, attention is shifting back to price discovery and the upside potential for digital assets. The focus is no longer on whether the bull run will continue, but rather on how quickly BTC and ETH can reclaim their previous highs.
Bitcoin (BTC) is currently demonstrating strong bullish momentum after consolidating near recent peaks. With the market pricing in potential rate cuts by the Federal Reserve, liquidity is expected to increase, leading to a rise in risk appetite. Short-term support levels for Bitcoin are around $113K–$114K, with resistance levels approaching $117K–$120K. Institutional inflows and the possibility of ETF approvals are exerting upward pressure on the token, setting the stage for medium-term price targets of $130K–$140K.
The long-term rally in BTC suggests that the cryptocurrency is approaching the upper limit of the ongoing consolidation within a rising wedge pattern. The weekly RSI is trading above the average and has recently displayed a bullish divergence, signaling a potential continuation of the uptrend. Additionally, Bitcoin has bounced back before testing the support level, further supporting the bullish outlook. As a result, the Bitcoin price appears poised to reach $125K, provided it surpasses and maintains levels above $118,000 this month.
On the other hand, Ethereum (ETH) is also displaying strong bullish potential, with nearly 30% of its total supply staked, thereby reducing circulating liquidity. With exchange balances at record lows and short positions at elevated levels, ETH price is primed for upward pressure. The market response to cooling inflation and the increasing likelihood of Fed rate cuts is positive, boosting risk appetite. Short-term price targets for Ethereum range from $2,800 to $3,200, while medium-term projections point to $3,800 to $4,200, underlining Ethereum’s role in the current crypto bull run.
As Ethereum enters the bullish range, there are signs of a potential pullback, with the ETH price possibly retracing to local support levels. The Chaikin Money Flow (CMF) indicator is declining, indicating a decrease in money inflows, while the Moving Average Convergence Divergence (MACD) is showing a decline in buying pressure and nearing a bearish crossover. This suggests that the Ethereum price could test support at $4,271, and if bulls defend these levels, a rebound could lead to new highs; otherwise, a drop below $4,000 appears likely.
In conclusion, the crypto market continues to exhibit strong bullish momentum, with Bitcoin leading the way and altcoins gradually gaining traction. The influx of liquidity, institutional involvement, and ongoing accumulation of major assets signal growing confidence in the market. A breakout in Bitcoin could trigger rallies in Ethereum and other top altcoins, potentially sparking a broader market upsurge. Key levels to watch are $125K for BTC and the rising dominance of altcoins, indicating a new phase in the bull cycle. Overall, the setup suggests a significant market-wide rally on the horizon.