Bitcoin bulls sentiment is supported by a fall in inflation expectations, the market focuses on July CPI data

The crypto market continued to stabilize, with Bitcoin rising nearly 7% in the week ending July 5, recording its strongest weekly performance since March. This round of gains was mainly driven by a fall in inflation expectations. The breakeven inflation rate, which measures market inflation expectations, has dropped significantly recently. The two-year indicator has fallen below 2%, close to the Fed's inflation target level, and long-term inflation expectations have also weakened. At the same time, WTI crude oil prices fell in line with inflation expectations and have fallen to levels similar to those before the geopolitical conflict in February, causing the market to reassess inflationary pressures, interest rate cuts expectations and the trend of the US dollar. Some analysts believe that if the US dollar index (DXY) weakens, it will further reduce the resistance to Bitcoin's rise, because the two are usually negatively correlated. However, some opinions also remind that inflation in the service industry is still sticky. The decline in oil prices does not necessarily mean that the overall inflation trend will reverse. Monetary policy may continue to maintain a "higher and longer" stance. The next key point in the market is the US June CPI data on July 14, which may become an important catalytic factor in judging the path of inflation and the direction of risky assets.