Soft U.S. CPI meets weak BTC: Is the ‘Bitcoin bottom’ thesis breaking?

Market expectations and market rallies often move hand in hand.

Keeping this in mind, the latest U.S. CPI data should have ideally triggered a stronger rally, especially with crypto consolidating in a tight range for over 6-7 weeks now.

Yet, the reaction was pretty muted, with Bitcoin [BTC] up just 0.5% and still capped below the $65k resistance. This came after U.S. CPI printed a 3.4% for July, exactly in line with expectations.

Further adding to the dovish expectations, market odds of a September rate hike fell to 34% after the U.S. CPI data was released.

This is the lowest probability of a September rate hike since the 17th of July, with odds now half of what they were on the 27th. In essence, rate hike expectations have cooled significantly.

Maksym Sakharov, co-founder and CEO of the debanking infrastructure provider WeFi, told AMBCrypto,

The softer print is welcome since the Fed will have more breathing room for deciding on a rate hike, but one release will not settle the argument over the inflation path due to pre-built volatility.

However, these macro tailwinds might just be the tip of the iceberg.

Across social media, the narrative around a “Bitcoin bottom” and a potential “short squeeze” is heating up. From BTC’s technical setup, these narratives aren’t completely far-fetched either.