Bitcoin Surges to a Record High of $124,000! ETH Challenges Historical Peak; Market Bets on Significant Rate Cuts in September

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Bitcoin Hits Historic High

The recent cooling of inflation data in the United States, combined with rising expectations for interest rate cuts from the Federal Reserve (Fed), has propelled the cryptocurrency market to a strong rally. This morning, Bitcoin (BTC) successfully broke through previous resistance, reaching an all-time high of $124,474, officially surpassing the previous record set in mid-July. Ethereum (ETH) continues to approach its 2021 high of $4,865, hitting a maximum of $4,783.

CPI Cooling Fuels Risk Assets

The overall CPI year-on-year growth rate for July in the United States was 2.7%, lower than the market expectation of 2.8%; the core CPI year-on-year growth rate was 3.1%, slightly above the expected 3.0%. Commodity inflation, which was originally anticipated to rise as businesses passed higher costs onto consumers, turned out to be lower than expected. The milder overall inflation data further strengthens the Fed’s rationale to initiate a rate cut cycle in September, with the majority of market participants currently betting on a 25 basis point cut. Futures pricing indicates that expectations for rate cuts in 2025 remain around 60 basis points, with the lower bound for rates in 2026 estimated to be 3%. Following the release of inflation data, U.S. stocks continued to advance, reaching new historical highs, while a narrowing of credit spreads and a rebound in loan growth provided a favorable environment for high-risk assets.

ETH Sees Long-Term Fund Inflows, Market Cap Effect Amplified

The recent strong performance of Ethereum is partly attributed to sustained buying from institutional investors and digital asset treasury companies (DAT). The market is closely watching Bitmine’s plans to expand its ETH inventory, as the smaller market cap and slightly lower liquidity of ETH make the impact of new capital on prices more pronounced. Meanwhile, ETH’s year-to-date gains have already surpassed those of Bitcoin, benefiting from ongoing inflows into Ethereum spot ETFs and corporate ETH inventory rising to nearly $9 billion. If capital continues to flow into ETH DAT and spot ETFs, the market is optimistic that ETH could challenge its historical highs, further driving the expansion of the entire Ethereum DeFi ecosystem.

Key Risks and Events

Market analysis firm QCP Capital notes that the upcoming focus will be on the Jackson Hole annual meeting, where investors expect Fed officials to provide clear signals regarding a rate cut in September. Before this, there is only one CPI and one Non-Farm Payroll (NFP) data release scheduled; however, QCP Capital believes that this data will be insufficient to influence the Fed’s decision-making.