Surprise inflation data halts Bitcoin surge; What’s next for BTC price?

As the wider cryptocurrency industry starts a new week with a bearish sentiment halting its significant advances from the previous days, Bitcoin (BTC) has seen a drop to below $115,000, possibly as part of a market-wide reaction to surprise inflation data in the United States.

Indeed, the Producer Price Index (PPI) numbers came in unexpectedly hot for July, rising annually by 3.3% and cutting short the crypto surge triggered previously by soft Consumer Price Index (CPI) data and other positive developments, raising concerns about Bitcoin’s future performance.

For now, the concerns have proved justified, as the flagship decentralized finance (DeFi) asset is fighting to keep its head above the $115,000 level, having lost 2.79% in the last 24 hours, accumulating a decline of 4.98% across the previous seven days, and adding up to the 2.84% drop on its monthly chart.

Commenting on the downturn, the team at Kronos Research explained that it might be the result of hotter-than-expected inflation data. This could have led to increased caution and risk aversion, besides reducing expectations of a rate cut in September and strengthening the US dollar.

Additionally, the U.S. Treasury Secretary Scott Bessent has made conflicting statements that the government wasn’t planning strategic reserve Bitcoin purchases, whereas it would rely only on seized holdings, and then announcing the assessment of budget-neutral options for financing the federal BTC stash.

Institutional interest still strong

That said, according to BTC Markets’ Rachael Lucas, flows in spot exchange-traded funds (ETFs) suggest capital rotation and not collapsing conviction in Bitcoin, as Grayscale and Ark Invest recorded outflows from their Bitcoin ETFs. 

Furthermore, as she pointed out:

Meanwhile, Lucas identified $115,000 and $112,500 as crucial support levels, warning that Bitcoin continuing to dip below them could indicate further decline toward the area of $110,000. For now, however, Bitcoin is still holding onto the first support, and bouncing away from it could signal recovery and perhaps even a return toward its race for a new all-time high (ATH).