Last night, the U.S. July CPI came out. Overall, it was basically in line with expectations and didn’t create too many surprises for the market.
The CPI year-over-year was 3.4%, core CPI was 2.5%, and month-over-month rose by 0.1% and 0.2%, respectively—everything was essentially in line with expectations. After the data was released, U.S. stocks were somewhat stronger, but BTC’s reaction was rather muted; at one point it even slipped below the $64,000 area.
I think the biggest significance of this CPI for the crypto market isn’t that it directly sparks a fresh round of explosive gains, but rather that:
At least for now, it doesn’t give the Federal Reserve a new reason to remain more hawkish.
Previously, the nonfarm payrolls already showed clear signs of cooling, and inflation hasn’t re-accelerated either. Concerns about September policy have eased somewhat.
But the issue is that the CPI is only “in line with expectations,” not clearly below them—so the rate-cut trade hasn’t been fully ignited for the moment.
For BTC, what matters more next is liquidity and the Fed’s outlook. If employment continues to weaken and inflation keeps drifting downward gradually, the market will start pricing in rate cuts again, and the capital environment for BTC, ETH, and high-beta altcoins will improve significantly.
My view:
Short term: consolidating upward, but it’s not time to directly kick off a one-way rally.
Medium term: if subsequent data continues to support the rate-cut outlook, there’s still room for risk assets to move higher.
So right now I’d rather wait for BTC to break out, instead of FOMO’ing just because a CPI that’s in line with expectations came out.
The worst period for macro may be behind us, but the true liquidity inflection point still needs more data confirmation.
The CPI year-over-year was 3.4%, core CPI was 2.5%, and month-over-month rose by 0.1% and 0.2%, respectively—everything was essentially in line with expectations. After the data was released, U.S. stocks were somewhat stronger, but BTC’s reaction was rather muted; at one point it even slipped below the $64,000 area.
I think the biggest significance of this CPI for the crypto market isn’t that it directly sparks a fresh round of explosive gains, but rather that:
At least for now, it doesn’t give the Federal Reserve a new reason to remain more hawkish.
Previously, the nonfarm payrolls already showed clear signs of cooling, and inflation hasn’t re-accelerated either. Concerns about September policy have eased somewhat.
But the issue is that the CPI is only “in line with expectations,” not clearly below them—so the rate-cut trade hasn’t been fully ignited for the moment.
For BTC, what matters more next is liquidity and the Fed’s outlook. If employment continues to weaken and inflation keeps drifting downward gradually, the market will start pricing in rate cuts again, and the capital environment for BTC, ETH, and high-beta altcoins will improve significantly.
My view:
Short term: consolidating upward, but it’s not time to directly kick off a one-way rally.
Medium term: if subsequent data continues to support the rate-cut outlook, there’s still room for risk assets to move higher.
So right now I’d rather wait for BTC to break out, instead of FOMO’ing just because a CPI that’s in line with expectations came out.
The worst period for macro may be behind us, but the true liquidity inflection point still needs more data confirmation.