Crypto Market Eyes Breakout as US CPI Data Raise Fed Rate Cut Bets: BTC to ATH?

The July US CPI annual inflation data was released on August 12th, resulting in high market volatility. Gold, stocks and crypto all moved at the time of the release of the news. The financial markets continued to price in the tariffs imposed by President Donald Trump.

The US CPI inflation data rose higher but was still below the expected value of 2.8%. The Fed aimed to achieve an annual inflation rate of 2% increase yearly. This was generally good for the consumers.

July US CPI Annual Inflation Data

As evidenced by Jesse Cohen on X (formerly Twitter), the US CPI annual inflation increased to 2.7% while the Core CPI jumped to 3.1% year-on-year. This rose to a six-month high and 0.32% from the previous month. July saw the second-largest MoM increase in 2025. The 3-month and 6-month annualized rates were 2.8% and 2.4% respectively.

The rising CPI could lead consumers to minimize their spending. However, the current reading did not sound an alarm.

Analysts saw tariffs as the main drivers of the CPI, but data showed otherwise. Houses, medical services, electricity, food, air transport, and used cars topped the list of those influencing the spike in inflation.

The report did not scare consumers but did impact the movement of stocks, crypto and foreign exchange pairs.

U.S. CPI Jumps, Rate Cut Odds Shift and Markets React

The odds of rate cut for September 17th rose to 94.2% with more voices calling out the Fed Chair Jerome Powell to act. Still, Powell has been adamant about making this move. Some called for Trump to fire Powell if he did not reduce the interest rates immediately.

Powell argued earlier that most people he knew predicted higher inflation rates. This explained why he was reluctant to make this decision. With the odds rising and Trump becoming extremely upset with Powell, rates could be lowered in September.

The markets reacted anomalously as similar data previously resulted in reduced prices of crypto assets. This was because participants were now using cryptocurrencies to hedge against inflation. The advantage stemmed from the crypto platforms that offered unique rates instead of traditional lenders.

Bitcoin (BTC) price exceeded $116K while altcoins saw mixed sentiments. Major altcoins gained from the data, but Gold declined. For memecoins, most were down, but the report gave a glimpse of hope. For instance, Fartcoin was down about 21% but the loss was reduced to 11% in the day.

Bitcoin Eyeing An ATH?

According to Ali Charts on X, BTC usually rallies after CPI or PPI if it had dipped just before the reports and vice versa. At the time of writing, BTC did the former. Right after the news, Bitcoin price was attempting to break above $120,000 after spending the last week below $115K.

BTC whipsawed orders just above $120K to scare out weak hands. Now, BTC was headed for a new ATH above $124K as capital inflow into crypto persisted.

Data from Glassnode showed that short-term holders had increased their holdings by over 220K BTC in less than six months. However, the addition was dwarfed by the 540K BTC bought from January to March. Institutions were becoming more dominant in the crypto markets. Predictions suggested they could hold about 10% of the supply.

Bitcoin and other cryptocurrencies could be a haven against inflation. The odds of the Fed also reducing rates looked inevitable but the sole decision rested on Powell. Either way, analysts expected a bullish outlook but still saw the need for risk management.