Bitcoin Price Approaches All-Time High: Traders Eagerly Anticipate Key Inflation Data

Bitcoin has made a strong comeback recently, rising 4.5% since Saturday. It’s now close to its all-time high of $122,838 from mid-July. This rally comes after a tough week where prices fell.

Open interest in Bitcoin, which refers to the total number of outstanding contracts, has also surged by over 7,800 BTC. This suggests that many traders are betting on the price to go up. Experts think this increase is mainly due to speculative long positions.

Sean Dawson, a research head at Dervie, believes Bitcoin could reach $150,000 by the end of the year. “There’s still plenty of fuel left for this bull run,” he said. Rising tech stock prices have also helped boost Bitcoin’s value, as there’s a growing optimism about potential rate cuts in the U.S.

A report from Ecoinometrics highlights that Bitcoin is reacting similarly to tech stocks lately, indicating that it behaves like a risk-on asset. In other words, Bitcoin tends to rise when investors are feeling more optimistic about the economy.

As all eyes turn to the upcoming July Consumer Price Index report, expectations are high. Economists predict a slight increase in annual inflation to 2.8%. A lower-than-expected inflation figure could strengthen calls for a Fed rate cut in September.

Dawson notes the unique environment we’re in, where low interest rates usually favor crypto investments. However, there’s also caution among traders, as some have been buying put options, which protect against price drops. This behavior suggests a rising worry about inflation data surprises.

If inflation results are unexpectedly high, it could create a “mini panic,” potentially leading to a sharp market decline. As Bitcoin and other risk assets navigate these unpredictable waters, the interplay of economic trends and trader sentiment will be crucial for their future.

For more insights on Bitcoin trends, you can check related analyses from sources like Decrypt and Reuters.

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