US July CPI Meets Expectations, Why Is BTC Not Rising But Falling? What Is the Market Really Waiting For?
The US July CPI has finally been released.
From the data itself, this inflation report did not bring any significant surprises to the market.
The US July CPI rose by 0.1% month-on-month and by 3.4% year-on-year; the core CPI rose by 0.2% month-on-month and fell to 2.5% year-on-year, which is largely in line with market expectations.
After the data was released, the market's expectations for the Federal Reserve's interest rate hike in September decreased, with the corresponding probability dropping from about 46% before the data release to about 38%.
According to traditional logic, if inflation does not exceed expectations and the rate hike expectations decline, it should theoretically be positive for Bitcoin and other risk assets.
However, the market's response has been quite different.
After a brief rebound, BTC has weakened again, currently retreating to around $63,500, with a decline of nearly 2% over the past week.
Why?
The answer may lie precisely in the fact that this CPI was "too in line with expectations."
1. CPI Has Not Worsened, but Has Not Provided a New Catalyzing Factor for Rise
Financial market transactions never revolve solely around the data itself, but also the "difference between data and expectations."
If inflation is significantly higher than expected, the market will quickly raise concerns about the Federal Reserve maintaining high interest rates or even tightening policy further, which typically pressures risk assets.
Conversely, if inflation is significantly lower than expected, the market may quickly increase bets on interest rate cuts, weakening the dollar and U.S. Treasury yields while providing liquidity support for risk assets like BTC.
The problem this time is that the CPI basically falls within the expected range.
This means that the market's prior concerns about uncontrolled inflation risks have eased to some extent, but simultaneously, there has not been enough new information to significantly adjust rate expectations.
Therefore, the first reaction after the CPI release was more about "risk alleviation" rather than "trend reversal."
This is also why BTC briefly rebounded after the data release but quickly returned to a weak oscillatory state.
From a trading perspective, this distinction is very important.
Alleviating risk does not equate to creating a rising trend.
2. Market Concerns About September Rate Hike Have Decreased, But Rate Cut Logic Is Still Not Fully Established
After the CPI release, the market's expectations for the Federal Reserve's interest rate hike in September have clearly decreased.
But this does not mean that the market has begun fully trading rate cuts.
The core issues facing the Federal Reserve remain:
Is inflation continuing to decline?
And, is the labor market showing clear signs of weakness while inflation is still above the 2% target?
These two variables determine future policy space.
If inflation continues to decline and the labor market shows signs of cooling, the necessity for the Federal Reserve to tighten policy further will naturally decrease, and the market will gradually increase expectations for a future policy shift.
However, if future data shows that inflation remains sticky, even with some slowdown in the labor market, the Federal Reserve may not quickly pivot.
Thus, the market is currently more in a "waiting for confirmation" phase.
3. The Real Pressure on BTC Does Not Come From CPI, But From "Lack of New Macro Catalysts"
Recently, the correlation between Bitcoin trends and macro data has significantly strengthened.
The market continually re-prices the future liquidity environment through CPI, employment data, Federal Reserve meetings, and Treasury yields.
This also means that when important data does not bring significant new information, BTC can easily revert to a trend dominated by its technical structure and capital flow.
Currently, BTC is oscillating around $63,500, facing significant pressure in the short term above.
Previously, the market has made multiple attempts to break upwards, but has not formed a sustained trending market.
From this perspective, BTC currently seems to be waiting for the next round of macro data to confirm direction, rather than having entered a new unilateral trend.
4. Three Time Windows That Are Worth Watching Next
After the CPI release, the market will not run out of catalysts.
On the contrary, there are three important observation windows coming up.
1. Jackson Hole Global Central Bank Annual Meeting
The Jackson Hole meeting will serve as an important window for the market to observe the Federal Reserve's policy stance.
The market is particularly focused on whether the Federal Reserve Chairman will further signal on inflation, employment, and future interest rate policies.
If the policy statement is clearly dovish, the market may further reduce expectations for future rate hikes.
If the policy statement continues to emphasize inflation risks, then risk assets may face pressure again.
2. September 4 US Employment Report
The employment market will become another key variable.
If new jobs decrease significantly and the unemployment rate rises, the market may believe that the labor market is further cooling.
In such a case, even if inflation is still above 2%, the Federal Reserve's future policy space may change.
Conversely, if employment data remains strong, the probability of the Federal Reserve continuing to stay cautious or even hawkish will increase.
For BTC, the importance of employment data is on the rise.
3. September 11 Next Round of US CPI
If this CPI primarily addressed the issue of "has inflation suddenly gotten out of control," then the next round of CPI will further help the market assess inflation trends.
What truly determines the Federal Reserve's policy direction is never data from a single month, but rather the continuous changes in data.
If inflation continues to decline over the next few months, the logic for rate cuts will become increasingly accepted by the market.
However, if energy, tariffs, and other price factors push inflation back up, the Federal Reserve may face a policy dilemma again.
5. In the Next Phase for BTC, Macro and Technical Aspects May Enter Into a Game Again
As it stands, the CPI has not changed the core structure of BTC.
It has merely alleviated some of the tail risks previously concerning the market.
What truly matters for BTC is whether subsequent data can form a continuous macro logic.
If in the future we see:
Inflation continues to decline → Employment market cools → Federal Reserve's policy pressure decreases → Rate expectations decline → Liquidity environment improves.
Then BTC may gain new upward catalysts.
But if we see:
Inflation keeps fluctuating → Energy prices rise → Employment remains strong → Federal Reserve maintains high rates or even tightens further.
Then risk assets may still face pressure.
Therefore, at this stage, instead of simply judging "is CPI good or bad for BTC," it is better to focus on a more core question:
Are the data in the coming months pushing the Federal Reserve's policy direction toward the same direction?
If the answer is affirmative, BTC is more likely to break free from its current oscillatory structure.
If the answer remains ambiguous, the market may continue to maintain a state of high volatility and low trend.
Conclusion
The significance of the US July CPI does not lie in whether it directly tells us if BTC will rise or fall next.
What it truly conveys is:
Inflation has not temporarily created new tightening pressure for the Federal Reserve, but it is not strong enough to drive the market to re-price rate cuts either.
Therefore, the market's attention has started to shift to the next set of data.
For BTC, what should be truly focused on next is not the good or bad of a single piece of data, but whether inflation, employment, and Federal Reserve policy are beginning to form a clearer direction.
The CPI has been released.
The real market choices may just be beginning.
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