Bitcoin steadies with eyes on US CPI, ETH continues to outperform

Bitcoin is steadying above 118k after failing to hold above the key 120k psychological level. The mood is cautious ahead of US CPI data, which could provide more clues over the Federal Reserve’s next move. However, news of a China-US trade truce extension and ongoing corporate BTC treasury demand keep the price supported. 

Bitcoin rose to a peak of 122.3k on Monday, before falling 2% over the past 24 hours. The price has steadied at 118.9k at the time of writing, but still trades up 4% over the past week. Meanwhile, the broader cryptocurrency market cap has eased to $3.94 trillion, -2.19% over the past 24 hours and down from a record $4.06 trillion yesterday. 

How could the US CPI impact BTC? 

The mood across the broader crypto market is cautious ahead of US CPI data, which is expected to show that inflation ticked higher in July 2.8% annually, up from 2.7% as the impact of Trump’s trade tariffs continues to feed through supply chains into the economy. Hotter-than-expected inflation could undermine bets for a September rate cut by the Federal Reserve and pull risk assets lower. Although there is still the August CPI and non-farm payroll report before the September rate decision. The market is pricing in an 85% probability of a 25 basis point rate cut in September.  

BTC corporate & institutional demand remains firm 

Persistent institutional and corporate treasury demand continues to support BTC. BTC ETFs recorded a fourth consecutive day of net inflows on Monday. Meanwhile, Metaplanet announced a purchase of 518 BTC worth $1.85 million, taking its total holdings to 18,113 BTC. 

Is ETH outperformance hindering BTC? 

It's worth noting that ETH has been outperforming BTC in recent weeks. ETH jumped 20% last week compared to Bitcoin’s 4% rise and trades 54% higher over the past month compared to Bitcoin’s 10% gain. ETH ETF demand has also flipped BTC ETF demand, posting 13 straight weeks of net inflows, including a record $1.02 billion in net inflows yesterday alone.  

This capital allocation towards ETH could be preventing BTC from breaking to fresh record highs. BTC may need to wait for profit-taking in ETH in order for capital to be reallocated BTC.

Bitcoin technical analysis 

BTC/USD found support on the 50 SMA at 111.9k on August 3 before recovering higher, rising to a peak of 122.3k yesterday (the 61.8% Fib extension of the 74.4K low to 111.9k high). The price has since fallen back below the key 120k psychological level and trades at 118k in familiar territory. 

The long upper wick on yesterday’s daily candle is a reason for caution, suggesting that there was little buying demand at the higher levels. Sellers will need to break below the 117k, the 20 SMA, and the 50% Fib extension to expose the 50 SMA at 114k. A break below 111.9k, the August low and May high, creates a lower low, bringing 110k and then 105k into play. 

However, for now, the 117k support is holding. Should buyers successfully defend this level, a close above 120k is the next target on the upside. Above here 123k, the record high comes into play before buyers look towards fresh record highs. 

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