Bitcoin rally cools on profit taking ahead of key US inflation data

Bitcoin’s recent surge to a new all-time high cooled on Tuesday as traders locked in profits and assumed a cautious stance ahead of the latest U.S. Consumer Price Index report, expected to offer fresh signals on the Federal Reserve’s policy path.

The price of bitcoin declined over 4% to around $117,000 after climbing as high as $122,800 on Monday, according to The Block’s price page. The pullback follows a sharp rally from $108,000, with heavy liquidation levels now forming near the $116,300 mark, Nansen research analyst Nicolai Sondergaard said.

“I think it's expected that after a large run, some correction is likely, especially following an uninterrupted move from $108,000 to $122,000,” Sondergaard told The Block. “We now see quite some heavy liquidation levels around $116,300, which is something to watch next as an immediate psychological level.”

Inflation data

The market is seemingly bracing for the June CPI print, which could influence expectations for interest rate cuts this year. Core CPI is expected to rise by around 3.0% to 3.1% year-over-year. A hotter-than-expected reading could discourage risk sentiment and extend the current pullback in crypto markets, Bitfinex analysts told The Block.

“With core inflation expected around 3.0–3.1% YoY, a hotter-than-expected print (e.g., core >3.2%) could delay Fed easing, dampen market sentiment, and raise borrowing costs,” Bitfinex analysts said. “This would strengthen the dollar and hurt demand for non-yielding assets like Bitcoin, potentially extending the pullback by another 5–10%, based on prior CPI events.”

Conversely, a softer reading—such as headline CPI under 2.5% and core easing toward 2.9%—could revive bullish momentum and push BTC beyond $120,000 again. A similar outcome occurred in May, when cooler CPI triggered a sharp rally.

The longer-term inflation outlook also remains in focus, with some forecasts pointing to structurally higher CPI readings in 2025 due to trade tariffs. That may cap the duration of any rate-cut-driven rally, Bitfinex analysts noted, but they emphasized crypto’s resilience and rising investor confidence as evidenced by steady ETF inflows.

Sondergaard added that diverging inflation data sources are adding to market uncertainty. “Platforms like Truflation point to a potential decrease in inflation, whereas more traditional sources expect it to remain flat or rise,” he said. “At this stage, a decrease could be a positive signal, while an increase would likely be seen as somewhat bearish—especially amid concerns over tariffs and their lagging impact.”