Earlier today, Bitcoin (BTC) briefly climbed above the $110,000 mark after the release of cooler-than-expected US Consumer Price Index (CPI) data. The softer inflation reading strengthens the case for the US Federal Reserve (Fed) to begin cutting interest rates – a development that could benefit risk-on assets like BTC.
Bitcoin Gains As US Inflation Softens
Today, the US Bureau of Labor Statistics released the May 2025 CPI report, showing signs that inflation is continuing to ease. Both the headline and core CPI readings came in below economists’ forecasts.
Specifically, the headline CPI rose by just 0.1% in May, compared to the 0.2% consensus estimate. On a year-over-year (YoY) basis, the headline CPI registered at 2.4%, slightly below the expected 2.5%, and up from 2.3% in April.
Core CPI – which excludes volatile components like food and energy – also rose by 0.1% in May, versus the forecasted 0.3%. The April figure was 0.2%. On a YoY basis, core CPI came in at 2.8%, marginally lower than the 2.9% consensus.
Following the inflation report, BTC saw modest gains, climbing 0.6% to briefly touch the $110,000 level before retracing slightly. The data has increased the likelihood of a Fed rate cut in the near future.
According to data from the Chicago Mercantile Exchange (CME) FedWatch Tool, traders are currently pricing in two rate cuts in 2025, with the first expected in September and the second in December.
BTC also stands to benefit from easing geopolitical tensions. US President Donald Trump stated today that a trade deal with China “is done,” further boosting investor sentiment.
Meanwhile, crypto analyst Titan of Crypto highlighted a bullish golden cross forming on Bitcoin’s weekly chart. In a post on X, the analyst shared the following chart and emphasized the importance of BTC holding above the $109,000 level to confirm a potential breakout.
A golden cross is a bullish technical pattern that occurs when a short-term moving average (MA) – typically the 50-day – crosses above a long-term MA like the 200-day. This crossover signals a potential shift in momentum and is often seen as an indicator of a sustained upward trend.
Macroeconomic Conditions Favor A BTC Rally
Beyond easing inflation, several macroeconomic indicators support a bullish outlook for BTC. Historically, Bitcoin tends to track M2 money supply, and a rise in global liquidity could contribute to further price appreciation.
Some analysts are also drawing parallels between Bitcoin and gold. Crypto commentator Ted Pillows recently predicted that BTC could reach $130,000 by Q3 2025, mirroring gold’s performance in inflationary cycles.
Importantly, the current Bitcoin market shows no signs of overheating. Unlike past bull runs, the current cycle lacks signs of retail-driven mania, suggesting there may still be significant upside potential. At press time, BTC trades at $109,876, up 1% in the past 24 hours.
Featured Image from Unsplash.com, charts from X and TradingView.com
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