Inflation in the US will decide the fate of bitcoin: why August 12 is the key date of the month
The release of July U.S. inflation statistics, scheduled for August 12, will be the main trigger for the cryptocurrency market. This data will determine whether the Federal Reserve decides to raise interest rates in September. The ability of Bitcoin to overcome the psychologically important level of $70,000 directly depends on this decision.
The market is currently in a state of heightened uncertainty. Recent employment data has thrown investor expectations into disarray. In July, the U.S. economy lost 23,000 jobs, although analysts had forecast growth. The unemployment rate, meanwhile, fell to 4.1%, adding contradictions to the picture. However, the key signal is the revision of May and June data: the figures were collectively downgraded by approximately 103,000 jobs. This is no longer a one-off glitch but a sustained trend of a cooling labor market.
The market reaction was swift: the probability of a September rate hike collapsed from 55% to 41% after the report's release. Inflation expectations for July stand at around 3.4% year-over-year, with a core reading of 2.2%. An additional risk factor is instability in the oil market. The June slowdown in gasoline prices provided a temporary reduction in inflation, but by July the fuel factor had become unpredictable again.
Three scenarios for how events unfold
My analysis points to three possible scenarios for market reaction. The first is that the data comes in below forecasts. In this case, bond yields will decline, and the technology sector and cryptocurrencies will see the most positive impact. The second is that the figures match expectations (around 3.4%). Then we will see short-term volatility without a change in the overall picture, and the chances of a September hike will remain balanced.
The third, most dangerous scenario for risk assets is an acceleration of inflation to 3.5–3.6% or higher. This would return the market to expectations of policy tightening, yields would rise, and both tech giants and cryptocurrencies would come under pressure. For the regulator, the worst combination is a weak labor market with high inflation. Raising rates under such conditions is risky for the economy, but ignoring rising prices is impossible. The historical pattern is clear: when inflation data came in below forecasts in February, April, and July, markets rose—after the July report, the Nasdaq gained more than a percent, and Bitcoin climbed from $62,000–63,000 to above $64,000. Conversely, on May 12, when inflation exceeded expectations, yields soared and the crypto market came under pressure.
The baseline forecast is that the data will match expectations, but the market will perceive it negatively. To remove the threat of a rate hike, sustained inflation declines are needed in both August and September.
My expert commentary: The current situation resembles a classic bull trap. Bitcoin is showing a local bounce, but accumulated liquidity above and a return of confidence could give way to a new wave of decline toward $60,000 and lower under strong pressure. I would view the $65,000 zone as a potential entry point for short positions, awaiting confirmation of resistance and the formation of bearish momentum before the inflation data release. Volatility ahead of August 12 will be elevated in both the stock and cryptocurrency markets, with the latter seeing more pronounced moves.