Benjamin Cowen breaks down a better than expected inflation report and why it fits perfectly into the seasonal pattern he has been calling all year.
Key Points
Key Highlights:
- Headline inflation dropped from 4.2% to 3.5% against a consensus of 3.8%, with housing making the biggest contribution to the drop and core inflation falling to 2.6% as well
- This is exactly the script from 2018, a low in late June, a brief sell off into mid July around CPI, then a larger rally fueled by cool inflation data before giving everything back in August
- Bitcoin is up 10% in July already, matching the same seasonal pattern where 2022 saw a 20% July gain and 2018 saw nearly 40%, both of which were fully handed back by September
- Bitcoin is still being squeezed between the 200 week moving average below and the bear market resistance band above, and a resolution is coming in the August to Q4 window
- Oil is starting to bounce which could reignite inflation pressure down the line, worth watching but not yet a concern
Takeaway The July rally happened exactly when it was supposed to and for exactly the reason expected. The question now is not whether Bitcoin rallies but how high it gets before the bear market resistance band forces the decision that determines where the final low lands.
