Bitcoin tested the $120,000 level amid a decline in the U.S. producer price index.

Bitcoin rose above $120,000 against the backdrop of a decline in the Producer Price Index in the U.S. in June, which surpassed analysts' expectations, but it was unable to overcome resistance and pulled back to the mark of $118,000. The coin reacted to the encouraging figures of the Producer Price Index (PPI), although it could not hold on to the heights achieved.

4-hour chart BTC/USDT. Source: cryptocurrency screener Cryptovizor

PPI cooled inflationary sentiments

Despite a 2.3% increase, the PPI was 0.2% below expectations and 0.4% lower than the growth of the previous month. The trading resource The Kobeissi Letter confirmed on social media X: "Producer inflation is cooling down again."

The PPI indicators sharply contrasted with the consumer price index (CPI), published the day before. CPI rose by 2.7% year-on-year, reaching a peak since February.

Cryptocurrency analyst Matthew Hyland (Matthew Hyland) commented after the PPI release: "Inflation continues to decline. The only increase in the CPI was related to the rise in oil prices in June, but they have fallen again, which will be reflected next month. There is no high inflation that almost all experts claimed would be here by now."

The Fed is not in a hurry to lower rates

Some commentators suggested that the Federal Reserve System will now be even less inclined to lower interest rates, which would be a blow to risk assets. Others, however, argued that inflation indicators are far from critical, especially against the backdrop of the ongoing trade war in the USA.

The latest data from the FedWatch tool of the Chicago Mercantile Exchange showed no hints of a change in market sentiment regarding rate cuts at the upcoming FOMC meeting on July 30.

Bitcoin found support

Analyst Rekt Capital noted: "It seems that Bitcoin has found support just above its daily CME gap." Rekt Capital was referring to the "gap" remaining between the closing and opening levels on the Chicago Mercantile Exchange's Bitcoin futures market, which typically attracts the price towards it. This gap is between $114,300 and $115,600.

1-day chart BTC/USD. Analytics: Rekt Capital

Current inflation indicators create a mixed picture for the cryptocurrency market. The cooling of PPI supports investor sentiment, while the rise in CPI reminds of persistent inflationary risks.

hashtelegraph.com