- Bitcoin surged past $124K as cooling CPI data boosts investor confidence in risk assets.
- Rate-cut expectations grow as inflation slows, fueling bullish momentum in the crypto market.
- Political uncertainty adds pressure to safe-haven demand, thus supporting Bitcoin’s rally.
Bitcoin surged to a new record above $124,000 on Wednesday, rewriting its all-time high, fueled by cooling inflation, rate-cut speculation, and record institutional buying. The rally comes as political pressure mounts on the Federal Reserve, adding another layer to the market’s momentum. The surge pushed Bitcoin’s market value to $2.44 trillion, while Ethereum approached its 2021 all-time high.
Inflation Eases, Fed Expectations Soften
Investor sentiment shifted sharply after the latest U.S. Consumer Price Index data. July’s Consumer Price Index showed headline inflation at 2.7% year-over-year, slightly lower than expected. Meanwhile, core CPI rose to 3.1%, hinting at lingering price pressures as markets embraced the overall cooldown.
Investors responded by ramping up bets on a September rate cut, with market pricing showing near-certain odds, while some estimates put it above 90%. Treasury leaders added to that sentiment by publicly calling for significant easing, even suggesting a possible 50-basis-point drop.
Meanwhile, tensions surfaced as political pressure surrounding Fed Chair Jerome Powell intensified. Discussions over potential replacements for the Fed Chair added uncertainty, raising questions about the Fed’s independence. Market participants see this as a possible catalyst for more aggressive monetary easing.
Institutions Jump In with ETF and Treasury Demand
Capital flows into Bitcoin remain robust. Spot Bitcoin ETFs recorded strong inflows of over $86 million in a single day. This brought cumulative gains to $156.7 billion, roughly 6.5% of Bitcoin’s market cap. Institutional demand remains a key driving force.
Meanwhile, corporate and sovereign treasuries continue building positions. The number of BTC owned by institutional investors has surged to over 3.6 million, which is 17% of the total supply. Such robust demand base is assisting in holding the price of Bitcoin despite the market turbulence.
At the same time, on-chain activity indicates robust buying volumes that suggest conviction, not speculation. Some hourly buy volumes neared $1.7 billion, reflecting coordinated accumulation across whales and institutions alike.
Meanwhile, Ethereum also reacted to the bullish sentiment as its prices shot by 3.2% to $4,738.07, nearing the 2021 all-time high of $4,900. Along with the rise of Bitcoin, digital assets now account for a growing share of mainstream investor portfolios.
Some technical models predict that Bitcoin could reach between $126,000 and $133,000 by the end of the year, if favorable macro conditions and ETF inflows continue. Further, analysts point to Bitcoin’s elasticity under shifting Fed policy expectations.
Related: Bitcoin Rises as US CPI Data Falls Below Inflation Targets
Outlook Hinges on September Fed Move
Despite strong momentum, uncertainty looms as the rally could be potentially diverted, considering the Federal Reserve’s decision in its upcoming September meeting. If trouble brews on inflation, rate cuts may stall, reducing support for risky assets. Politically, the pressure on Powell’s leadership can prevail to influence markets on dovish expectations further. But it may also bring instability, in case of being seen as overreach.
Still, the current rally reflects a rare alignment of economic cool-downs, institutional demand, political signals, and macro drivers. If September delivers a rate easing, then Bitcoin could carry on its positive movement through year-end.
For now, investors are watching price ranges between $120K–$125K as areas of consolidation. A breakout above them could unlock the $130K zone, while any pullback could reset the rally if investor confidence weakens.
