Bitcoin (BTC) Price Hovers Near All-Time Highs as Cooling U.S. Inflation May Lead to Fed Rate Cut

Bitcoin's price has remained steady, hovering just below its all-time high of $111,800.

Bitcoin (CRYPTO: BTC) price has remained nearly unchanged in recent hours, hovering just below the $112,000 mark. As the cryptocurrency market continues to display strong momentum, questions arise regarding whether Bitcoin will break through to reach new all-time highs. This speculation is amplified by the recent reports of cooling inflation in the U.S. and the ongoing U.S.-China trade talks, both of which could play crucial roles in shaping market behavior.

According to data from blockchain analytics firm Glassnode, Bitcoin price is currently trading at $109,535, a few percent below its all-time high of $111,800. As the market approaches the later stages of a bull run, Long-term Holders (LTHs) continue to dominate the wealth distribution, a trend observed in previous cycles.

At this stage of a bull market cycle, one would typically expect to see more profit-taking among LTHs, defined as those who have held onto their Bitcoin for over 155 days. However, a unique dynamic is unfolding. Despite realizing massive profits, LTHs are not selling in significant quantities. Instead, they are continuing to accumulate more coins throughout the later stages of the cycle.

The chart above showcases the increasing supply of Bitcoin held by LTHs, which ultimately leads to less selling pressure. This trend can be attributed, in part, to the entry of institutional investors and the growing influence of U.S. Bitcoin ETFs, which are designed for long-term holding strategies.

Despite the rising supply held by LTHs, the realized profit/loss ratio stands at 9.4, which signals that the majority of coins are being spent at a substantial profit.

Historically, such a high ratio has coincided with market euphoria, which is usually followed by a local or cycle top. However, if demand remains strong, there is also a possibility that the rally could continue for months.

The recent report on the U.S. Consumer Price Index (CPI) for May showed that inflation rose 2.4% year-over-year, lower than the economists’ expectations of 2.5%. Core CPI, which excludes volatile items like food and energy, held steady at 2.8%.

This lower-than-expected inflation could encourage the Federal Reserve to adopt a more dovish stance. With inflation contained, the Fed may be less likely to raise interest rates and could even consider reducing them, which would appeal to risk assets like Bitcoin.

“Falling inflation and the possibility of a rate cut could push Bitcoin into the final leg of its rally,” said Nic Puckrin, founder of Coin Bureau, in a recent analysis. This scenario would involve increased investment in Bitcoin, potentially driving its price toward new all-time highs.

In addition to inflation data, another factor that could influence Bitcoin’s trajectory is the outcome of the U.S.-China trade talks. The progress of these discussions will be crucial for determining the fate of equities and, consequently, cryptocurrencies.

According to Nansen Principal Research Analyst, Aurelie Barthere, "The narrative around U.S.-China relations is becoming increasingly important for risk assets in general, and that includes Bitcoin."

Following President Trump’s announcement of a finalized tariff deal with China, we might see less uncertainty in the global market as the U.S.-China trade talks reach a critical juncture. The outcome of these talks, along with other diplomatic developments, could create a more stable economic environment.

This stability would be beneficial for cryptocurrencies, which are often viewed by investors as a hedge against geopolitical risks and inflationary concerns.

As the trade talks progress and yield further agreements, it could have a positive impact on Bitcoin’s price. If these talks continue to be successful, leading to increased confidence in the market, we might see a rally in Bitcoin and other risk assets.

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