The US CPI data suggests that inflation continues to cool, and a rate cut in September is almost a certainty

Author: Mary Liu, BitpushNews

On Thursday, the highly anticipated Consumer Price Index (CPI) report in the U.S. exceeded expectations, with the inflation rate in June dropping to its lowest level in over three years. The CPI rose by 3% year-on-year, better than the expected 3.1%, while the core CPI fell to 3.3%, below the expected 3.4%.

The CPI data suggests that inflation is continuing to cool, boosting investors' confidence in betting on a rate cut by the Federal Reserve later this year. CME Fed Watch data shows that a rate cut in September is almost a "done deal," with the probability of a 25 basis point cut in September at 84.6%, and the cumulative probability of a 50 basis point cut at 8.1%.

BTC experienced a "roller coaster" market. According to Bitpush data, after the CPI was released, Bitcoin reached a high of around $59,540, followed by a significant sell-off, dropping to a low of $57,200 in the afternoon. As of the time of writing, it was trading at $57,447, down 0.5% over the past 24 hours.

The altcoin market showed mixed results, with the top 200 altcoins fluctuating. MANTRA (OM) performed the best, rising by 12.5%, followed by Galxe (GAL) up 9.4%, and Stacks (STX) up 7.4%. BinaryX (BNX) saw the largest decline, down 27.5%, while Bonk (BONK) fell 8.2%, and Render (RNDR) dropped 6.9%.

The overall market capitalization of cryptocurrencies is currently $2.13 trillion, with Bitcoin's market share at 53.49%.

In the U.S. stock market, major tech stocks like Nvidia (NVDA), Microsoft (MSFT), and Meta (META) all experienced declines, while Tesla (TSLA) ended its 11-day streak of gains, dropping over 7.5%. By the end of the day, the S&P 500 and Nasdaq indices fell by 0.88% and 1.95%, respectively, while the Dow Jones index rose by 0.08%.

Germany's $3 Billion Sell-off Frenzy Set to End

Blockchain data from Arkham Intelligence shows that Bitcoin wallets associated with the German government transferred a total of 10,567 BTC to cryptocurrency exchanges Bitstamp, Coinbase, Kraken, and other service providers like Flow Traders and Cumberland DRW in batches on that day, worth over $600 million.

After today's transactions, wallets related to German authorities hold only 4,925 BTC, valued at $285 million at current prices, which is just 9.9% of the Bitcoin initially seized from Movie2k.

This suggests that, at the current pace, Germany's Bitcoin sell-off could end as early as Friday or early next week, as the wallet has sold approximately 35,000 Bitcoins so far this week.

This may help alleviate market concerns, as traders have been monitoring the on-chain movements of potential large sellers in the market over the past few weeks, linking the recent declines to selling pressure.

JPMorgan: Market Expected to Rebound Starting in August

Despite Bitcoin struggling to gain momentum due to various factors, most analysts, including those at JPMorgan, believe a turnaround is on the horizon.

According to a research report released by JPMorgan, the liquidation in the crypto market is expected to begin to subside in July, with a rebound anticipated starting in August.

While an improvement in market sentiment is expected, the bank has revised its net cryptocurrency flow forecast for the year to date from $12 billion to $8 billion, stating that given Bitcoin's high price relative to its production costs, they are skeptical that the previously estimated level of $12 billion can be sustained for the remainder of the year.

Analysts led by Nikolaos Panigirtzoglou stated, "The expected decrease in net flows is primarily due to the decline in Bitcoin reserves across exchanges over the past month."

Analysts emphasized that the liquidation of Bitcoin by Mt. Gox creditors and the German government's sell-off of Bitcoin may be reasons for the decline in reserves.

Brian Dixon, CEO of Off the Chain Capital, stated in a report, "In my view, the drop in Bitcoin prices over the past week is due to the German government selling Bitcoin seized from illegal transactions. Their government has transferred thousands of Bitcoins to exchanges and market makers for sale."

He added, "I believe the German government's sale of Bitcoin is a mistake, as it should hold Bitcoin in its treasury reserves, which would provide Germany with a strategic geopolitical advantage as Bitcoin continues to appreciate."

Historically, Bitcoin has shown a positive correlation with the S&P 500; however, as U.S. stocks surged, Bitcoin struggled in sideways trading and declines, with this correlation beginning to weaken at the end of May. Market analyst Ali Martinez stated on the X platform that this situation could change soon, with Bitcoin potentially catching up quickly through a rapid price increase.

In a follow-up tweet, he noted: "The Bitcoin accumulation trend score indicates a shift in investor sentiment, with many now choosing to accumulate BTC after experiencing a phase of selling pressure since April."

According to Arsen, author of Bitcoin Therapy, the recent sideways price movement is a typical characteristic of Bitcoin's bull market cycle. He believes that before this bull market ends, the price of BTC will reach around $300,000.

He stated in his article: "When you feel scared, smart money is doubling down, because this drop is nothing new. As you can see, Bitcoin hits new all-time highs every four years: 2012: Bitcoin rose from $12 to $1,000 = an increase of about 9,000%; 2016: Bitcoin rose from $650 to $19,000 = an increase of about 3,000%; 2020: Bitcoin rose from $8,000 to $69,000 = an increase of about 1,200%; 2024:?"

Arsen added: "Note that in each consecutive cycle, Bitcoin's return rate has a decline of about 60%, which means the increase in this cycle could be 450%, with the price of each Bitcoin reaching about $330,000."