Before the U.S. Consumer Price Index (CPI) was announced, the cryptocurrency market experienced a slight pullback on Monday, with BTC falling below 120,000 and ETH dropping to 3,150, which was clearly a risk-averse move before the release of important data. The CPI data released last night did not disappoint the market, with the annual CPI remaining at 2.7%, lower than the expected 2.8%, and the core CPI rising 0.3% as expected. After the data release, market sentiment was reignited, with the Nasdaq and S&P 500 reaching new highs, and the cryptocurrency market led by ETH, with prices directly breaking through 4,600 to reach a 2025 high.
VX: TZ7971
After the July non-farm employment report, the threshold for interest rate cuts has changed. If the CPI data were too hot, it could have disrupted the September rate cut plan, but this did not happen. Although the July CPI data does not show "zero inflation," its intensity may not be enough to prevent the September rate cut.
Based on current broad economic data, the September rate cut is a done deal, and the market is now focusing on whether the cut will be one or two basis points, or whether there will be two or three rate cuts this year. Therefore, under the premise that the rate cut is a given event, the market's expectations for asset price increases driven by the rate cut have soared, and the market will continue to improve before the September rate cut unless there are particularly negative news, with the cryptocurrency market having the added catalyst of institutional entry, making the increase worth expecting.
However, the market is currently in a sensitive stage of high speculation and low volatility contradiction, and short-term market reversal risks need to be watched. The current digital asset market shows polarization: Ethereum is strongly rising, approaching its historical high, driving a general rise in Altcoins, but the increase in uncleared contracts to $47 billion shows leverage accumulation and increased market fragility; Bitcoin is consolidating at high levels, with stable on-chain indicators, but the implied volatility in the options market has reached a multi-year low, indicating potential violent volatility risks.
The strong performance of the digital asset market continues, with Ethereum soaring to $4,600, its highest level since December 2021, currently only 5% lower than its historical high, and Bitcoin's momentum still strongly supported by robust on-chain fundamentals.
The strong performance of Altcoins has driven the surge in uncleared contracts for mainstream Altcoins, reaching a record total of $47 billion, increasing the possibility of price volatility. In contrast, the Bitcoin options market is still priced in a low-volatility environment, with implied volatility at a multi-year low, a setting that historically often signals a sudden expansion of actual volatility.
The two major cryptocurrencies are currently approaching important resistance levels in history: Ethereum is at the +1σ level of the active realized price at $4,700, and Bitcoin is at the +1σ level of the short-term holder cost basis at $127,000. The price development near these thresholds will be crucial, determining whether the market will further advance towards higher cycle targets or face a sharp correction driven by leverage.
