TLDR
Bitcoin dropped to $118,630, reversing weekend gains amid caution before U.S. inflation data
Metaplanet purchased 518 additional Bitcoin for $61.4 million, now holding $1.85 billion worth
Bitcoin recently surged to $122,000 before retreating, with strong resistance at $120,000
Active Bitcoin addresses increased by 15% over the past ten days, reaching a 9-month high
Long-term Bitcoin holders show reduced selling activity, suggesting growing market confidence
Bitcoin has experienced a rollercoaster of price movements in recent days, falling back to $118,630 after reaching intraday highs near $122,000. The pullback comes as investors exercise caution ahead of the upcoming U.S. Consumer Price Index (CPI) data release.
The world’s largest cryptocurrency dropped by 2.8% as traders reduced their exposure to risk assets before the inflation report. Market participants are closely watching whether the data will support hopes for a September interest rate cut by the Federal Reserve.
The CPI report, due later on Tuesday, is expected to show a slight increase in inflation for July. If inflation rises more than anticipated, it could weaken recent bets on a Fed rate cut, which would likely impact Bitcoin and other cryptocurrencies.
Analysts are also monitoring whether President Donald Trump’s tariffs have contributed to higher inflation, though August’s data may provide more insight on this front.
Lower interest rates typically benefit cryptocurrencies by increasing market liquidity for investment in speculative assets. Bitcoin and the broader crypto market are expected to respond positively if the CPI data reinforces expectations of rate cuts.
Market Activity Shows Mixed Signals
Despite the price drop, on-chain metrics suggest growing interest in Bitcoin. The number of active addresses has increased by 15% over the past ten days, reaching 367,349 – a 9-month high. This uptick indicates Bitcoin is gaining traction among new investors.
Long-term Bitcoin holders have also shown reduced selling activity in August. After July saw one of the largest profit-taking periods in Bitcoin history, the trend of daily profits above $1 billion has slowed down.
This decrease in selling pressure from long-term holders contributes to a positive outlook for Bitcoin’s future price movement. As the market stabilizes, investors appear to be showing increased confidence in the cryptocurrency’s long-term potential.
Technical Analysis and Price Barriers
Bitcoin is currently facing strong resistance just below the $120,000 level, which has prevented further upward movement in recent trading sessions.
The cryptocurrency’s price action will likely be influenced by the upcoming CPI report. If inflation comes in higher than the expected 2.8% year-over-year, Bitcoin might remain consolidated under the resistance level.
However, if the CPI report shows inflation at or below the current 2.7% rate from July, Bitcoin could push past the $120,000 resistance. A positive inflation report might create momentum for Bitcoin to reach $122,000 again and potentially challenge its all-time high of $123,218.
Corporate Interest Continues
Japanese company Metaplanet Inc. disclosed the purchase of an additional 518 Bitcoins for $61.4 million, at an average price of $118,519. This brings the company’s total holdings to 118,113 coins, worth approximately $1.85 billion.
Metaplanet, now the world’s sixth-largest corporate Bitcoin holder, recently announced plans to raise $3.7 billion through a stock offering, largely aimed at acquiring more Bitcoin.
The company’s strategy mirrors that of Michael Saylor’s MicroStrategy, which has used equity issuances to fund its Bitcoin purchases. MicroStrategy remains the world’s largest corporate Bitcoin holder and has seen its valuation increase substantially as Bitcoin’s price has risen over the past year.
The broader cryptocurrency market has moved in tandem with Bitcoin. Ethereum, the second-largest cryptocurrency, fell 0.6% to $4,281.12 after approaching its 2021 record highs.
Other major cryptocurrencies also experienced declines, with XRP falling 4.1% to $3.1360, while Solana and Cardano dropped between 5.5% and 6% each. Popular memecoins were not spared, with Dogecoin falling 6.3% and $TRUMP dropping 5.2%.
As the market awaits the CPI data, Bitcoin’s next move will likely depend on whether the inflation report supports or undermines expectations for a September rate cut by the Federal Reserve.
