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The US Consumer Price Index (CPI) figures came out this morning, with July’s CPI inflation rate falling to 2.9%, below expectations of 3%. Industry experts believe a rate cut in September is becoming more likely, and this could lead to a sustained rally for Bitcoin (BTC) towards the $65,000 price level.

Meanwhile, core CPI inflation, excluding food and energy, came in as expected at 3.2%. Notably, this is the first month that CPI inflation has fallen below 3% since March 2021.

“Overall, the disinflationary trend that has been visible since Q2 of this year is intact. It is mainly affecting the previous drivers of strong inflation, namely services, such as energy and housing. Supercore services inflation (the metric that Fed Chair Powell has frequently monitored and cited) was 2% on a 3m3m SAAR basis in July, down from 3.9% in June and 6.2% in May,” Aurelie Barthere, Principal Research Analyst at Nansen, shared with Crypto Briefing.

Barthere added that this is a sharp slowdown, allowing the Fed to cut rates this year. While futures markets are expecting a 100 basis point (bps) cut in December, Nansen analysts are more interested in the idea of ​​three 25 bps cuts, or a single 75 bps cut this year.

However, it all depends on whether there are real growth figures that show no signs of a sharp slowdown.

“Inflation is no longer the biggest concern for the Fed or the markets, real growth is now the priority. For equities and crypto to recover further, more good news is needed from the US real economy, especially the consumer,” Barthere explained.

Positive Effects on Bitcoin

Additionally, analysts at Bitfinex shared a note with Crypto Briefing in which they believe a rate cut in September would bolster the bullish outlook for Bitcoin and other risk assets.

“This expectation of a rate cut could lead to a sustained rally in both the cryptocurrency market and related ETFs as investors seek to take advantage of looser monetary policy,” the analysts said.

Furthermore, as inflation concerns ease, the market could see an increase in liquidity as investors anticipate lower interest rates. This makes speculative assets generally more attractive, analysts at Bitfinex pointed out.

As a result, the likelihood of a concrete rate cut could push Bitcoin to a range between $64,000 and $65,000. This is a key resistance level that has previously been affected by short-term whale activity.

“If the market sees the CPI data as a green light for the Fed to cut rates, Bitcoin could break through this resistance and trigger a bullish trend. However, if whales start selling as the price approaches this critical level, we could see some temporary selling pressure before a sustained breakout,” Bitfinex analysts concluded.

In July, Bitcoin’s price approached $65,000 as US stock markets recovered from significant declines influenced by macroeconomic indicators such as the PCE index.

Last month, bitcoin surged to $66,400 after April CPI figures showed an easing in inflationary pressures, fueling hopes that the Federal Reserve would cut interest rates in September.

Last month, Bitcoin hit the $66,000 mark on the back of disappointing US inflation figures and disappointing retail sales in April, prompting analysts to expect a possible rally to $84,000.

Earlier this year, Bitcoin value surged back to nearly $65,000 as investors anticipated the impact of the Federal Reserve’s upcoming decisions on the crypto market.

In March, Bitcoin whales bought over $1.2 billion worth of BTC during a market dip, quickly pushing the price back up to $65,000 and fueling anticipation for the upcoming halving.

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