Bitcoin Reaches Critical Support Before US CPI Data Release

FUNDAMENTAL OVERVIEW

Bitcoin has fallen back to the crucial $76,000 support area. This decline followed the strong US NFP report and a subsequent rise in oil prices, which together boosted expectations for a Federal Reserve rate hike.

The escalating tensions in the Middle East have dominated the week. Increased hostilities between the US and Iran, along with Yemen's Houthis targeting Saudi energy infrastructure, have driven oil prices to fresh highs.

Momentum accelerated as traders began factoring in a more extended conflict. This came after Trump predicted the war with Iran would conclude right after the US midterm elections in November, acknowledging the conflict is likely to persist at least through that period.

Yesterday, WTI crude oil surpassed the psychologically crucial $100 mark, leading to a broadly hawkish repricing of interest rate expectations.

Attention today turns to the monthly Core CPI reading, the metric Fed officials have highlighted. Fed Governor Waller recently indicated he would back a September rate increase if the monthly core figure surprised on the upside. That statement came before oil prices spiked further.

Markets are currently pricing a 67% likelihood of a rate increase at the next meeting. An in-line CPI reading probably will not shift the market's expectation for a hike. If the probability remains elevated entering the FOMC meeting, the Fed may feel compelled to hike simply to avoid surprising markets on the dovish side.

Given this context, a soft Core CPI reading could provide a short-term lift for Bitcoin. However, an upside surprise might worsen the risk-off mood and prompt a selloff, as markets could price in an even steeper trajectory for rate hikes.

BITCOIN TECHNICAL ANALYSIS – DAILY TIMEFRAME

The daily chart shows Bitcoin was rejected at the 82,500 resistance level before dropping back to the crucial 76,000 support area. Buyers are expected to defend this level with a clear stop-loss below it, positioning for a return toward resistance. Conversely, sellers aim to push the price lower to increase bearish exposure toward the next support at 67,000.

BITCOIN TECHNICAL ANALYSIS – 4 HOUR TIMEFRAME

A downward trendline on the 4-hour chart defines the recent bearish momentum. Should the price bounce back to this line, sellers will likely use it as a trigger, with a stop above it, targeting a breakdown below the current support. Buyers, however, need to see the price break above the trendline to build bullish positions toward resistance.

BITCOIN TECHNICAL ANALYSIS – 1 HOUR TIMEFRAME

On the hourly chart, a minor resistance zone sits around 77,600. Sellers may step in here with a stop above this level aiming to push for new lows. Buyers will look for a breakout above this barrier to extend the pullback toward the larger trendline.

UPCOMING CATALYSTS

All attention today is on the US CPI report.