Bitcoin Rally Slows as Traders Take Profits

Bitcoin's impressive rise to a new all-time high experienced a slowdown on Tuesday as traders opted to take profits and became more cautious in anticipation of the latest U.S. Consumer Price Index report. This report is expected to provide critical insights into the Federal Reserve's future policy decisions. The price of Bitcoin fell by over 4%, settling around $117,000, down from its peak of $122,800 on Monday, as reported by The Block. This pullback comes after a significant rally from $108,000. Nansen research analyst Nicolai Sondergaard noted that heavy liquidation zones are now forming near the $116,300 mark, making it a key psychological level to monitor. Sondergaard commented, "It’s natural to expect some correction after a considerable run, especially given the uninterrupted ascent from $108,000 to $122,000. The liquidation levels around $116,300 are now critical." The market is gearing up for the June CPI report, which could sway expectations regarding interest rate cuts this year. The core CPI is projected to rise by approximately 3.0% to 3.1% year-over-year. A reading that exceeds expectations could dampen risk sentiment and prolong the ongoing pullback in crypto markets, according to analysts at Bitfinex. They stated, "If core inflation hits around 3.0%–3.1% YoY, a hotter reading (e.g., core >3.2%) could delay Fed easing, impact market sentiment negatively, and increase borrowing costs. This scenario could strengthen the dollar and reduce the demand for non-yielding assets like Bitcoin, potentially extending the retracement by another 5% to 10%." In contrast, a softer report, such as a headline CPI below 2.5% and core inflation easing toward 2.9%, could rejuvenate bullish momentum, leading BTC to surpass $120,000 once more. A similar situation unfolded in May when a cooler CPI led to a sharp rally. The broader inflation landscape is also under scrutiny, with some forecasts suggesting structurally higher CPI rates by 2025 due to trade tariffs. This could limit the duration of rallies driven by interest rate cuts, though Bitfinex analysts highlighted the resilience of cryptocurrencies and increasing investor confidence, as shown by steady ETF inflows. Sondergaard added that differing inflation data from various sources adds to market uncertainty. "While platforms like Truflation suggest a potential decline in inflation, traditional sources project stability or increases," he explained. "At this point, a decrease could signal positive movement, while an increase may appear bearish, especially with concerns about tariffs and their delayed impacts." Disclaimer: The Block is an independent media outlet providing news, research, and data. As of November 2023, Foresight Ventures is a leading investor in The Block. Foresight Ventures invests in other companies within the crypto sector. Crypto exchange Bitget is a primary LP for Foresight Ventures. The Block maintains its independence to deliver objective, impactful, and timely information regarding the crypto industry. Here are our current financial disclosures. © 2025 The Block. All Rights Reserved. This article is for informational purposes only and is not intended as legal, tax, investment, financial advice, or otherwise.