CPI report may show uptick in US inflation — How will Bitcoin price react?

The S&P 500 index is currently trading only 6% below its all-time high, which was reached in December 2021. Traditionally, such a situation would be seen as a bullish sign for risk-on assets, including commodities and cryptocurrencies, but this time, it appears that investors have been using the stock market as a means of protection against the recent inflation surge, which peaked at over 4% between April 2021 and May 2023.

For Bitcoin (BTC) and cryptocurrency investors, inflation has typically been viewed as a positive factor influencing the price, as evidenced by the previous all-time highs of $65,000 and $69,000 that occurred during a period of monetary expansion and increasing inflation in 2021. However, the current situation is different because inflation is making a comeback while the U.S. Federal Reserve (Fed) has been effectively reducing liquidity in the system. As a result, the impact of inflation on cryptocurrencies remains uncertain.

Is the tech stock bubble bursting?

The recent 7-day decline in tech giants, including Fortinet (FTNT) with a decrease of 25.7%, Block Inc. (SQ) with a drop of 20.5%, Paypal (PYPL) down by 15%, Shopify (SHOP) down 14.8%, and Palo Alto Networks (PANW) down 13.9%, has caught the attention of investors, particularly in light of the expectation of an additional interest rate hike by the Federal Open Market Committee (FOMC) on Sept. 20.

Economists predict that the Consumer Price Index (CPI) for July, which will be revealed on Aug. 10, will be around 3.3%, surpassing the previous month’s figure of 3% and exceeding the central bank’s 2% target. Given the latest unemployment rate of 3.5% in June, nearing a 40-year low, the movement toward tightening the Fed’s economy becomes more certain.

During uncertain times, gold, a traditional safe-haven has struggled to surpass the $2,000 mark on multiple occasions since 2020, indicating a lack of confidence in its ability to hedge against risks.

The real estate market has also been impacted, facing limited housing supply and rising mortgage rates, as evidenced by Redfin’s 2Q revenue drop of 21% compared to the previous year. The company expects a further decline of 15% to 20% in transaction value for the 3Q.

Even traditionally considered safe assets like bonds are losing some of their appeal due to the ongoing increase in U.S. debt. Investment mogul and hedge fund billionaire Bill Ackman reportedly