Cryptocurrencies Poised for Momentum Revival Ahead of U.S. Inflation Data
Bitcoin is holding steady today, maintaining a firm position above $118,000. Meanwhile, Ethereum has resumed its gains, rising over 2% today while remaining above the $4,300 mark.
The quiet moves across the crypto market come amid a relative decline in liquidity ahead of the release of July’s U.S. Consumer Price Index (CPI) data. Typically, the hours before and after the New York session’s open and close see subdued trading activity, and with anticipation building for a pivotal data release, this pattern becomes even more pronounced.
Market expectations point to a potential acceleration in annual inflation growth for the third consecutive month, with the rate projected to reach 2.8%. Should the actual reading match forecasts, cryptocurrencies could regain upward momentum, paving the way for further recovery of previous gains, especially among the major coins.
This comes at a time when the crypto market is enjoying a period of highly favorable fundamentals. On the regulatory front, the last major legal battles brought by the U.S. Securities and Exchange Commission against the industry, particularly the case against Ripple Labs, issuer of XRP, have now been concluded. In addition, former President Donald Trump has moved to end restrictions that previously prevented banks from doing business with companies flagged for reputational risk concerns, a category in which crypto firms were often unfairly placed.
Furthermore, Trump may be inclined to accelerate the integration of cryptocurrencies into the national financial system and lift additional restrictions, given his and his family’s growing involvement in the sector. The latest chapter in this expansion is a partnership between the Trump family’s World Liberty Financial (WLF) and Alt5 Sigma to raise $1.5 billion. This move expands their cryptocurrency empire which includes Bitcoin holdings of $2 billion owned by Trump Media. WLF also now holds more than $315 million worth of Ethereum.
To make conditions even more favorable — at least for now — the U.S. and China have agreed to extend their trade truce for an additional 90 days, adding another layer of relief to the market.
This sense of relief is already being reflected in market activity. Spot Bitcoin ETFs attracted over $178 million in net inflows, while Ethereum continued to shine, adding more than $1 billion in inflows yesterday alone, according to SoSo Value. Moreover, futures market positioning still shows buyers leaning heavily to the long side, with the open-interest-weighted funding rate for Bitcoin continuing to rise today, according to CoinGlass, despite this week’s price correction.
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