Bitcoin tops $64,000 after softer CPI, but traders flag resistance

Bitcoin moved back above $64,000 on Tuesday after a cooler-than-expected US inflation report gave crypto and stocks a lift. For everyday investors, the link is straightforward: lower inflation can reduce pressure on the Federal Reserve to keep tightening financial conditions, which often helps riskier assets.

TradingView data cited by Cointelegraph showed BTC/USD up more than 2% on the day as Wall Street opened. Bitcoin was recently shown at $64,256.63, while Ether was listed at $1,880.34, up 5.66%.

Inflation came in below forecasts

The June Consumer Price Index, or CPI, rose 3.5%, below the 3.8% economists had expected, according to data from the US Bureau of Labor Statistics cited by Cointelegraph. CPI tracks the prices consumers pay for goods and services, and investors watch it closely because it feeds into Federal Reserve rate decisions.

The BLS data showed the largest monthly decline in CPI since April 2020. Energy prices drove much of the drop, even with pressure in oil markets tied to the US-Iran war and the closure of the Strait of Hormuz oil route.

In its release, the Bureau of Labor Statistics said the energy index fell 5.7% in June after rising 3.9% in May, 3.8% in April and 10.9% in March. The agency said the decline in energy was the biggest reason the all-items index fell for the month, offsetting increases in categories including shelter and food.

US equities also traded higher after the report, while crypto markets showed relief. Softer inflation can make future rate increases less likely, or at least less aggressive, because high rates are used to cool demand and bring prices under control.

CME Group’s FedWatch Tool showed market pricing turning less hawkish after the data, though it still pointed to consensus expectations for a 0.25 percentage point Federal Reserve rate increase at the September meeting. Economist Mohamed El-Erian wrote on X that the CPI print should help cool what he described as an overly hawkish market view of monetary policy.

Traders still watched the $64,000 zone

The rally did not erase caution among Bitcoin traders. Cointelegraph reported that market participants were watching resistance above $64,000, meaning an area where sellers have recently been strong enough to slow or reverse price gains.

X commentator Vontro said they were looking for a full reversal of the CPI-driven move, with stops above previous Bitcoin highs. A stop is an order that can trigger a trade when price reaches a certain level.

Exitpump, another market commentator on X, said short positions were being squeezed after the CPI report. A short squeeze happens when traders betting on a price decline are forced to close positions as the price rises, adding more buying pressure. Exitpump also said sellers had struggled to push Bitcoin lower because of passive demand, while adding that the market remained range-bound.

CoinGlass data cited by Cointelegraph showed crypto short liquidations of just over $220 million in the prior 24 hours. Liquidations occur when exchanges forcibly close leveraged trades because traders no longer have enough collateral to keep them open.

Trader Killa said on X that they would watch for signs of exhaustion if Bitcoin moved above local highs. Killa said there was still liquidity above $64,800, but warned that failure to reclaim and hold the weekly open could leave Bitcoin forming a lower high before a possible test of the $60,000 area.

This story draws on original reporting from Cointelegraph.