Date: August 13, 2025
Bitcoin’s latest rally above $120,000 is being driven in large part by macroeconomic forces, particularly expectations of a Federal Reserve interest rate cut. July’s Consumer Price Index (CPI) data came in at 2.7% year-over-year, matching forecasts and reinforcing the belief that inflation is under control.
Inflation Stability Encourages Risk Appetite
The CPI stability suggests that the Federal Reserve’s tightening cycle is effectively cooling price pressures without pushing the economy into a downturn. As a result, market odds for a September rate cut have surged to around 94%, according to CME FedWatch data. Lower interest rates typically reduce the opportunity cost of holding non-yielding assets like Bitcoin, while also encouraging liquidity to flow into higher-risk investments.
Impact on Bitcoin Demand
The softer inflation outlook and anticipated monetary easing have strengthened Bitcoin’s appeal as both a hedge against currency depreciation and a speculative growth asset. Institutional investors, in particular, have increased exposure in anticipation of a favorable macro environment. This renewed demand has helped Bitcoin establish strong support in the $117,650–$115,650 range.
Technical and Market Outlook
If Bitcoin maintains its position above $120K, traders are eyeing the next resistance zones between $130K–$134K, with some bullish projections stretching toward $137K. However, technical analysts warn of a lingering CME gap around $95K that could act as a downside target if macro sentiment shifts.