US Inflation Data Crushes Bitcoin Hopes for Short-Term Rally

CoinShares, a digital asset investment product provider, has released an assessment of the latest US consumer price index (CPI) data. According to James Butterfill, Head of Research at CoinShares, the CPI data is not supportive for Bitcoin and may limit its upside potential in the short term.

The company notes that headline inflation was generally in line with expectations, while core inflation remained slightly above forecasts. This has increased the likelihood of a Fed interest rate hike in September and tightened monetary policy. As a result, markets viewed weaker inflation data as a catalyst for Bitcoin to sustain a move above $80,000, but the latest CPI data did not meet this expectation.

CoinShares also observed that mutual fund flows indicate weakening market sentiment. While approximately $1.3 billion flowed into digital asset investment products last week, there was a net outflow of $243 million recorded so far this week. For Bitcoin to make a stronger and more sustained move above $80,000, weaker economic data or a new policy catalyst may be needed.