- A 0.5% spike in the consumer price index (CPI) is expected for the upcoming July inflation report.
- Previously, the consumer price index (CPI) spiked to 5.4% YOY in the report from June.
- Bitcoin bulls are reacting positively to the soaring inflation.
Bitcoin recently managed to climb above the psychological resistance level at $40,000. Afterward, the leading cryptocurrency resumed its uptrend, reclaiming some of the lost territory. On August 8, Bitcoin hit a two-month high at just above $45,000, sparking projections on whether the crypto market is back on track.
Other crypto assets also imitated Bitcoin, with Ethereum surpassing the $3,100 price level, gaining approximately 30% in a matter of days. However, things might even get better for the crypto ecosystem with the upcoming July inflation report.
July Inflation Report Around the Corner
On August 11, the United States Bureau of Labor Statistics will release its inflation report for the month of July. Considering that the consumer price index (CPI) spiked to 5.4% YOY in the report from June, market analyzers predict another 0.5% surge in CPI for July.
These projections come after Jerome Powell, the Federal Reserve Chair, raised doubts about inflation being transitory. “As the reopening continues, bottlenecks, hiring difficulties, and other constraints could continue to limit how quickly supply can adjust, raising the possibility that inflation could turn out to be higher and more persistent than we expect,” Powell stated in a press conference on July 29.
Meanwhile, Bitcoin advocates have reacted positively to the soaring inflation. Bitcoin tested the key $29k support level multiple times, but each time, bulls managed to guard the leading cryptocurrency against further losses. Moreover, bulls have even pushed the price above $40,000, bringing a bullish sentiment to the market.
Lex Moskovski, chief investment officer (CIO) at Moskovski Capital, shared a Glassnode chart that highlighted the number of new entities dabbling into Bitcoin. “Amount of new Bitcoin entities continues to hit an all-time high,” Moskovski said.
Amount of new #Bitcoin entities continues to hit ATH.
I applied more aggressive MA14 for filtering out noise. pic.twitter.com/bJS4sHop8b
— Lex Moskovski (@mskvsk) August 8, 2021
Further adding momentum to the ongoing frenzy, Willy Woo, a prominent on-chain analyst, predicted that Bitcoin would soon hit $50,000 with this pace. “Strong HODLers have been taking this opportunity to scoop large amounts of coinage while we’re under the resistance ceiling,” Woo tweeted.
Woo added that there is a supply squeeze underway — a state when there is more spot market demand than the available amount of Bitcoin on exchanges. Such a situation would lead to higher bids by investors which would push the price to unseen levels. He stated:
I’ve not seen a supply shock opportunity like this since Q4 2020 when BTC was priced at $10k only to be repriced at $60k in the months thereafter. Our supply shock is still in play with higher prices expected.