Bitcoin traded softer around the Wall Street open on Wednesday as traders digested fresh US inflation data and reassessed how restrictive the Federal Reserve is likely to remain. Despite July CPI coming in line with expectations, BTC/USD slipped below $63,500, erasing earlier gains and bringing renewed attention to the $63,000 area.
Market focus is now shifting to Thursday’s Producer Price Index (PPI), with investors looking for clues on whether inflation momentum is truly cooling or merely pausing—especially after recent labor-market signals have already complicated the rate path debate.
Key takeaways
- BTC/USD slid back below $63,500 after July CPI matched expectations, showing inflation “in line” did not automatically translate into bullish momentum.
- CME Group’s FedWatch Tool indicates a higher probability that the Fed holds rates at the current 3.50%–3.75% range for September compared with a month ago.
- Traders are warning that the $63,000 support zone may be weakening as bounces lose strength, increasing the risk of a cleaner breakdown.
- Options pricing suggests traders are still paying for downside protection, and PPI is set to be the next catalyst for that view.
- Overhead resistance around $65,000–$65,500 remains a recurring barrier, with recent price action failing to produce sustained daily closes above it.
Inflation matched expectations—yet Bitcoin weakened
TradingView data showed BTC/USD moving down below $63,500 after initially holding gains. The broader market reaction was relatively muted in equities, because the July CPI report landed essentially where economists expected.
According to a Bureau of Labor Statistics (BLS) release, CPI increased 0.1% month-on-month and 3.4% year-on-year. The report also highlighted that the “shelter” component rose 0.1% in July and represented about two-thirds of the month’s all-items increase. Food prices edged up 0.1% overall, while the energy index declined 1.5% for the month.
While CPI did not repeat June’s downside surprise, the lack of a supportive reaction matters to crypto traders because it suggests the market is no longer searching for “good news” so much as it is looking for confirmation that the Fed is done tightening—or at least done tightening soon. In other words, a headline number that is merely “in line” may not be enough to shift risk appetite if traders remain focused on policy risk.
Rate expectations cooled, but traders are waiting for the next data point
Fabian Dori, CIO at Sygnum Bank, argued in emailed comments that CPI’s cooling effect—combined with weaker labor-market figures—could strengthen the case for the Fed to avoid additional rate hikes. He suggested this would be supportive for liquidity conditions that tend to benefit crypto and other risk assets.
Dori framed the near-term takeaway as a gradual cooling narrative without forcing markets into a recession scare or an abrupt “hawkish re-pricing.” He also pointed out that September rate odds should stay relatively stable if the macro mix does not deteriorate.
Consistent with that view, CME Group’s FedWatch Tool showed about 60% odds that the Fed would hold rates at its current 3.50%–3.75% range at the September meeting—up from 30% a month earlier. Investors typically watch this kind of shifting probability because it influences discount rates and risk appetite across assets, including crypto.
Still, traders are not fully comfortable treating CPI as a decisive turning point. Andrei Grachev, managing partner at DWF Labs, told Cointelegraph that an in-line CPI print doesn’t “resolve much” after the previous jobs report missed expectations. He also emphasized the state of the derivatives market: he said the Bitcoin options market was continuing to price a meaningful premium for downside protection into the end-August expiry.
Grachev added that Thursday’s PPI report would be the next check on whether that premium begins to fade—an important signal for whether traders see risk as moving toward normalization or remaining skewed to the downside.
Support at $63,000 under pressure as bounces weaken
Beyond macro, technical traders are focused on how price is behaving around the same key levels. Rekt Capital warned on X that each bounce from approximately $63,000 has been losing momentum, with the strength of the support appearing to progressively fade.
His commentary included a sequence indicating that the “support” effects on rebounds had diminished over time—culminating in what he described as support that had thinned to roughly 1.15% “thus far.” He cautioned that once rebounds become too weak, the market may stop defending the floor.
“At some point the bounces will become so weak that the floor will simply break.”
Rekt Capital also referenced earlier analysis that Bitcoin bear-market history may be repeating as the 50-month exponential moving average (EMA), currently around $65,827, acts as resistance rather than support.
That resistance picture is echoed by Bitfinex Alpha, the research arm of exchange Bitfinex. In an update published Wednesday, it said equities set all-time highs over the prior two weeks while Bitcoin continued to struggle with a consistent barrier in the $65,000–$65,500 zone. The research noted that from early August through that period, the market printed daily highs above $65,000 multiple times, but failed to record a daily close above that level since late July.
What to watch next: PPI and whether protection costs ease
With CPI already “in line,” the market’s next move is likely to depend less on whether inflation prints look merely acceptable and more on whether they confirm a sustained trend—something PPI could clarify. For traders, the key questions are whether Bitcoin can stabilize above $63,000 or whether weakening bounces turn into a more decisive break, and whether options pricing starts to show reduced demand for downside protection as expectations evolve.
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