Key takeaways:

• July US CPI held steady at 2.7% year-over-year, boosting Fed rate cut bets to 93.9% for September.
• Key price support lies between $117,650 to $115,650, with a deeper drop potentially testing a CME gap at $95,000.

Bitcoin price could continue to rally after the release of the July US Consumer Price Index (CPI), which shows inflation holding at 2.7% year-over-year, unchanged from June and below the 2.8% forecast. Core CPI, excluding food and energy, rose 3.1% annually, in line with expectations. On a monthly basis, overall CPI increased 0.2%, easing from 0.3% in June, while core CPI rose 0.3% versus a 0.2% gain previously.

The data reinforces a mildly bullish backdrop for Bitcoin, as cooling inflation strengthens the case for monetary easing, a positive factor for risk-on assets. A lower interest rate environment reduces the opportunity cost of holding Bitcoin, potentially drawing fresh capital into the market.

Following the CPI data release, market expectations for a September Fed rate cut surged to 93.9%, according to CME FedWatch, as traders priced in a higher likelihood of monetary easing.

However, the in-line core CPI figure suggests that underlying price pressures persist, indicating the Fed may still require more evidence before taking action.

Looking ahead, next week’s Producer Price Index (PPI, 2.3% estimated) and Core PPI (2.5% estimated) could be key. A softer-than-expected print could confirm a bullish macro setup for Bitcoin, reinforcing lower rate expectations and boosting demand for risk assets like Bitcoin.

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Bitcoin to hit $130,000 in September?

Following a bullish weekend, Bitcoin surged to Monday highs of $122,190, but gains were short-lived as the price quickly dipped 3% to $118,500, failing to secure a daily close above the $120,000 mark.

Post US CPI release, BTC rebounds to $119,500, though a decisive close above $119,982 remains key to confirming immediate upside momentum. A daily close above $120,000 would be a historic first, potentially igniting the next leg of Bitcoin’s rally.

On the technical front, a bullish flag pattern on the daily chart recently broke to the upside. The current pullback could be a retest before continuation toward the primary target of $130,000.

Notably, technical analyst Titan of Crypto projects a similar bullish scenario, eyeing $137,000 based on a descending trendline breakout seen on Sunday.

However, failure to reclaim $120,000 could invite short-term downside pressure. Immediate support lies in the $117,650–$115,650 zone. This key support area also coincides with the CME gap formed over the weekend, making it a key zone for traders to watch.

As noted , despite holding higher ground, BTC is not entirely immune to losing the critical $100,000 support, with a deeper correction could test levels as low as $95,000.