Wednesday's Softer-than-Expected U.S. Inflation Has Likely Set the Stage for Accelerated Gains in Bitcoin

"If BTC breaks out of the $105K-$110K range with conviction, we could see a sharp move to $120K and, more importantly, reach our year-end price target of $138.5K by the end of the summer"

U.S. inflation unexpectedly slowed in May, setting the stage for faster gains in bitcoin (BTC) to continue unlocking higher price levels, Benoit Mena, chief investment officer at 21Shares, told CoinDesk on Wednesday.

Softer-than-expected U.S. inflation has likely set the stage for accelerated gains in bitcoin (BTC) as the crypto is poised to rapidly unlock higher price levels, Benoit Mena, chief investment officer at 21Shares, told CoinDesk.

"If BTC breaks out of the $105K-$110K range with conviction, we could see a sharp move to $120K and, more importantly, reach our year-end price target of $138.5K by the end of the summer," Mena said.

"Today’s CPI print may serve as a bullish catalyst for Bitcoin - and it may be the unlock that brings this target forward by several months. If momentum continues building, a $200K Bitcoin by year-end is now firmly in play."

21Shares is one of the world's first and largest issuers of crypto exchange-traded products (ETPs).

The report from the Labor Department also showed that the cost of living, measured by the consumer price index, increased 0.1% last month after rising 0.2% in April. Economists surveyed by Reuters had forecast a 0.2% increase.

The report also showed the annualized CPI rose 2.4%, with core inflation matching the pace of April at 2.8%.

"This continued trend of cooling inflation strengthens the case for potential policy easing later this year. With the Fed’s June meeting approaching, the focus now shifts to how soon policymakers may respond to cooling inflation and shifting macro clarity," Mena said.

The CPI report prompted traders to price in 47 basis points of Fed easing, equivalent to roughly two 25 basis point rate cuts, this year, compared to 42 basis points earlier this week. Further, traders fully priced the rate cut for October, with the September probability hovering above 70%.

Mena added that the CPI tailwind comes on the heels of several bullish catalysts for bitcoin. These include sovereign and institutional adoption and the impending stablecoin regulation.

"As macro clarity improves, we should see Bitcoin flows accelerate - driven by renewed institutional confidence, increased activity from Bitcoin treasuries, and the continued rollout of state-level Strategic Bitcoin Reserve (SBR) programs. These dynamics could supercharge ETF inflows and reinforce Bitcoin’s evolving role in global portfolios. Bitcoin is built for this environment," Mena said.

BTC was trading at $108,440 at press time, according to CoinDesk data.