As inflation figures for July came in hotter than anticipated, the momentum in the cryptocurrency market continued unabated. The U.S. core Consumer Price Index (CPI) exceeded the 3% annualized mark for the first time, yet investors seemed unfazed. Bitcoin climbed over 1% on Wednesday, while Ethereum surged nearly 10%, suggesting a shift in market sentiment that defies traditional financial logic. The Federal Reserve’s long-standing 2% inflation target appears to be losing its grip on market realities. For more on how traders are interpreting these CPI figures, see Bitcoin Traders Watch CPI for Fed Cues.
Inflation? What Inflation?
Despite the CPI data, which in the past would have sent tremors through financial markets, risk appetite seems alive and well. “The 2% inflation target is likely a relic of the past,” remarked an anonymous analyst. U.S. Treasury Secretary echoed this sentiment, urging the Fed to consider a 50 basis-point rate cut come September. Such a move would be music to the ears of those invested in inflation hedges like Bitcoin and gold—though the latter remains somewhat stagnant between $3,300 and $3,400.
This exuberance isn’t confined to Bitcoin alone. Alternative cryptocurrencies have seen gains north of 10% as retail investors dive into more affordable options. Will K, CEO of decentralized trading platform VOOI, observed, “This rally reveals a structural shift in crypto market participation that could define this cycle.”
Institutional Meets Retail
The market’s complexion is changing, with institutional capital flowing through regulated products while retail traders embrace decentralized finance (DeFi) platforms that have removed previous barriers to entry. “Traders are no longer choosing between traditional and decentralized markets; they’re using both simultaneously,” K added. This dual-sided adoption is reshaping the market, creating an environment where both institutional and retail investors can thrive.
Adding to this dynamic, USDC issuer Circle recently launched Arc, a stablecoin-focused layer 1 blockchain aimed at revolutionizing financial transactions. Meanwhile, Nasdaq-listed ALT5 Sigma successfully completed a $1.5 billion registered direct offering, signaling robust confidence in the crypto sector.
The Road Ahead
As U.S. markets rally, the MOVE index—an indicator of Treasury market volatility—has hit its lowest point since January 2022, signaling a loosening of financial conditions and further risk-taking. Nevertheless, questions linger about the sustainability of this bullish sentiment. With Bitcoin trading near $120,000, the stakes are high. For insights into Bitcoin’s price trajectory as it approaches all-time highs, see Bitcoin Price Closes in on All-Time High as Traders Await Key Inflation Data.
Looking ahead, important dates loom on the horizon. Bullish’s parent company will begin trading on the NYSE, and Coinbase Derivatives is set to launch nano SOL and nano XRP futures. Meanwhile, macroeconomic events like potential peace talks between U.S. President Donald Trump and Russian President Vladimir Putin could add another layer of complexity to the global economic landscape.
As the crypto market continues its dizzying ascent, the debate over whether such a rally can last in the face of persistent inflation and geopolitical uncertainties remains open. Investors are left to ponder: Is this a new era of risk-on behavior or a precarious bubble waiting to burst?
Source
This article is based on: Risk-On Rules as CPI Fails to Dent Rally: Crypto Daybook Americas
Further Reading
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Steve Gregory is a lawyer in the United States who specializes in licensing for cryptocurrency companies and products. Steve began his career as an attorney in 2015 but made the switch to working in cryptocurrency full time shortly after joining the original team at Gemini Trust Company, an early cryptocurrency exchange based in New York City. Steve then joined CEX.io and was able to launch their regulated US-based cryptocurrency. Steve then went on to become the CEO at currency.com when he ran for four years and was able to lead currency.com to being fully acquired in 2025.
