US Inflation and Policy Shifts Halt Bitcoin's Rally: A Crypto Market Update

By James Van Straten (All times ET unless stated otherwise) Following a near-record high of $124,000 on Thursday, Bitcoin's price dropped, closing the previous weekend's CME gap at $117,600. This occurred after the release of higher-than-expected PPI inflation data and US Treasury Secretary Scott Bessent's apparent reversal on bitcoin purchases for a strategic reserve. The CME gap arises due to the mismatch between CME hours for BTC futures and bitcoin's continuous 24/7 trading, resulting in price discontinuities on the CME chart when the futures market is closed over weekends. Although filling the gap is a common market pattern, there is no guarantee it will happen. Bitcoin has established four all-time highs in 2025, with the magnitude of pullbacks after these peaks decreasing. After reaching $109,000 in January, BTC fell 30% to $76,000 by April. The $112,000 high in May was followed by a 12% drop in June, while July's $123,000 peak led to a 9% decline. Most recently, the $124,000 high in August has seen only a 7% pullback so far. Looking ahead, Friday's US retail sales report is forecast to be 0.7% month-over-month, which would be the strongest reading since March. A stronger-than-expected number could further reduce expectations for a September rate cut. Additionally, $12 billion in bitcoin options are set to expire on Deribit at the end of August, with most open call options concentrated between $120,000 and $124,000 strike prices. This suggests that if bitcoin trades near these levels, it would align with the positioning of many derivatives traders. Key events to watch include the CoinDesk Policy & Regulation conference, a one-day boutique event in Washington on September 10, where general counsels, compliance officers, and regulatory executives can meet with public officials responsible for crypto legislation and regulatory oversight.