The cryptocurrency market saw broad declines on Tuesday, 12th August, with Bitcoin dipping below the $122,000 mark and most major altcoins turning red ahead of closely watched U.S. inflation data. Market analysts say the Consumer Price Index (CPI) release could spark sharp price swings and potentially set Bitcoin on a path to a new all-time high — or send it lower.
“The CPI data could potentially trigger Bitcoin’s next all-time high or support the rally,” said Alice Liu, Head of Research at CoinMarketCap. “But expect volatility due to the release.”
According to CoinMarketCap data, global crypto market capitalization fell 2.5% in 24 hours to $4.04 trillion, with trading volume at $168 billion. Bitcoin (BTC) dropped 2.5% to $118,947, while Ethereum (ETH) traded nearly flat at $4,292. Dogecoin (DOGE) was the worst performer among top coins, sliding 6% to $0.2237, while Tron (TRX) gained 2.1% to $0.3468.
The downturn comes as U.S. spot Bitcoin ETFs recorded $178.15 million in net inflows Monday, led by BlackRock’s iShares Bitcoin Trust with $138.25 million. Ethereum ETFs broke their single-day inflow record with $1.02 billion, driven largely by BlackRock and Fidelity’s Wise Origin Ethereum Fund.
Analysts say macroeconomic factors are dominating sentiment. A softer CPI reading could bolster expectations for a September Federal Reserve rate cut, generally bullish for risk assets like crypto. However, derivatives market positioning is near yearly highs — $43 billion in BTC options and $14 billion in ETH options — potentially amplifying volatility through short squeezes or rapid liquidations.
Concerns over Bitcoin centralization are also growing, with BlackRock and MicroStrategy holding substantial BTC reserves. While such institutional interest supports market sentiment, Liu warns it’s “a double-edged sword” that could impact decentralization, especially in times of financial stress.