Bitcoin Reaches New Peak Above $123,000 as Inflation Holds Steady
Bitcoin has achieved an unprecedented all-time high, reaching $123,231, following the release of the latest US Consumer Price Index (CPI) data. The July inflation figures indicated a stable environment, showing no change month-on-month and an annual increase of 2.7%. This milestone has energized the cryptocurrency market, with many traders now anticipating that potential short liquidations could propel the digital asset even further, possibly beyond the $125,000 threshold.
Inflation Data Fuels Bitcoin's Ascent
The flat month-on-month CPI reading, coupled with a contained year-on-year increase, provides a backdrop of moderate inflation, which can often be seen as favorable for risk assets like Bitcoin. Stable inflation generally reduces the likelihood of aggressive monetary policy tightening by central banks, making non-yielding assets comparatively more attractive in an environment where the purchasing power of fiat currencies is not eroding rapidly.
Market dynamics are also playing a significant role in Bitcoin's current rally. The expectation among traders regarding a surge past $125,000 is largely tied to the concept of a short squeeze. As Bitcoin's price ascends, short sellers — those betting on a price decline — face increasing pressure on their positions. If forced to cover these shorts, they must buy Bitcoin, creating additional buying demand that can further accelerate the price rally and trigger a cascade of liquidations, thereby pushing the price higher. This mechanism underscores the strong bullish momentum currently dominating the market.