Bitcoin (BTC) may be preparing for this year's last major rally, alongside the declining inflation data in the US, expectations of a possible rate cut by the Fed, and the US-China trade agreement announced by Trump.
The consumer price index (CPI) data for May, released by the US Department of Labor, came in below market expectations. The annual CPI was 2.4%, while core inflation stood at 2.8%. After the announcement, Bitcoin's price exhibited horizontal movement between $109,600 and $110,100, while experts pointed out that these data could have a positive long-term impact on the market.
Why is the Fed's move important for Bitcoin?
Coin Bureau founder Nic Puckrin stated that inflation will continue to decline, which will lay the groundwork for the Fed to cut rates. According to Puckrin, the Fed's move to cut rates again could be an important trigger for starting the 'final leg of the Bitcoin rally':
"I expect inflation to continue its downward trend throughout the year. This will finally give the Fed confidence to cut rates again. This rate cut could initiate the 'final leg' of Bitcoin's current cycle and ultimately facilitate the return of retail investors to the crypto market. We are halfway through the year, and despite all negative forecasts, inflation continues to remain under control."
21Shares Research Strategist Matt Mena pointed out developments that accelerate the inflow of money into the Bitcoin market, stating that Trump's new trade agreement with China provides strong support for the market. Mena noted that these developments could allow Bitcoin's price to surpass the critical resistance level of $110,000 during the summer months and reach $138,500 by the end of the year.
Nansen analyst Aurelie Barthere emphasized that she does not expect the inflation data to have a serious impact on the markets in the short term, stating that the key factor is the trade talks between the US and China. According to Barthere, the outcomes of the trade agreement will play a decisive role in whether risky assets like cryptocurrencies can overcome significant resistance levels.
"These inflation data do not have a significant impact on the markets. However, developments in US-China trade talks will be much more influential. Progress or setbacks in the talks will play a critical role in allowing crypto markets to break through important resistance levels."
Bitcoin investors are now focused on the interest rate decision that the Fed will announce during its meeting on June 17-18. If a rate cut occurs, the expected 'final rally' in Bitcoin may gain momentum.
