Core logic: CPI data is the "switch" for interest rate cut expectations and determines the direction of short-term fluctuations
The current market expectation is that the CPI in June will be 3.3% year-on-year (previous value: 2.4%) and 0.2% month-on-month. If the actual data deviates from expectations, it will directly impact the probability of the Federal Reserve cutting interest rates in September (currently about 70%), thereby triggering volatility in the crypto market.
Three major scenarios and cryptocurrency reactions
Scenario 1: CPI ≥ 3.6% (25% probability) → "Short nuclear explosion"
Market reaction:
The probability of the Federal Reserve cutting interest rates in September dropped sharply to below 40%, the US dollar index rebounded to 105+, and US Treasury yields soared.
Bitcoin: plunged 7%-10% during the day, testing the support of $100,000-103,000 (the on-chain liquidation map shows that there is a forced liquidation point of $3.6 billion in longs at 103,000).
Ethereum: Affected by leveraged liquidation, the decline widened to 12%-15%, falling back to US$2,400-2,500.
Altcoins: Liquidity is exhausted, the top 20 currencies by market value have generally fallen by 15%+, and the risk of MEME coin being cut in half is extremely high.
Operational strategy:
When the spot position drops to ≤50%, the preferred hedging tool is to buy 120,000 BTC put options (implied volatility 68%, low hedging cost).
Avoid bottom-fishing and altcoins, and prioritize switching positions to stablecoins or interest-bearing assets (such as Lido staking ETH).
Scenario 2: CPI 2.9%-3.5% (55% probability) → "Volatility accumulation"
Market reaction:
The expectation of interest rate cut remains the same, the US dollar index is trading sideways at 102-104, and investors are in a wait-and-see mood.
Bitcoin: Intraday fluctuations are 3%-5%, maintaining fluctuations in the range of 108,000-112,000, and volatility continues to compress.
Ethereum: Benefiting from the expected Pectra upgrade, it outperformed the market and stabilized at $2,650-2,750.
Altcoins: Differentiation intensified, RWA and AI sectors (such as RNDR) were resistant to declines, and high-leverage coins (such as MEME) fell.
Operational strategy:
Hold a BTC/ETH spot position (60%-70%) and sell out-of-the-money options to earn premiums (such as a 115,000 BTC call option).
Adjust the portfolio to "interest rate cut sensitive" assets: LDO, stablecoin leader (CRCL).
Scenario 3: CPI ≤ 2.9% (probability 20%) → "Bull market fueling"
Market reaction:
The probability of a rate cut in September soared to 85%+, the US dollar index fell below 100, and funds poured into risky assets.
Bitcoin: It surged 8%-12% during the day, breaking through $120,000, triggering a short stampede (forced liquidation of ETH short positions at $1,700-1,800 boosted the market).
Ethereum: The rebound is accelerating, hitting $3,000-3,100 (technically breaking through the 200-day moving average pressure).
Altcoins: High Beta varieties (SOL, ADA) rose by 20%+ in a single day, and institutional holdings (RWA, DePIN) led the way.
Operational strategy:
Full spot position + low leverage (3-5x) to chase the rise, with a focus on ETH, SOL and pledged derivatives.
Buy 120,000 BTC call options + 3,000 ETH call options to take advantage of the volatility premium.
Key indicators verify the signal
On-chain data: If the net outflow of BTC from the exchange is greater than 5,000 in the hour before the CPI is released, it indicates that whales are betting on the positive (the net outflow in the recent 7 days is 18,700).
Total market value of stablecoins (currently 156 billion): More than 1 billion new issuances in a single day = new capital entering the market.
Derivatives Signals:
BTC perpetual funding rate＞0.1%: Beware of overheated bulls, as bearish conditions may lead to a waterfall.
ETH option IV＞80%: a sign of volatility amplification, suitable for hedging strategies.
The Iron Law of Risk Control: Three Preventions and Three Don’ts
Three protections: Anti-leverage liquidation: The leverage ratio is ≤2x in the hour before the data, and the stop loss is set at -5%.
Prevent liquidity trap: stay away from altcoins with trading depth less than $1 million.
Prevent policy black swans: 20% of assets are transferred to cold wallets to prevent exchanges from crashing.
Three things not to touch: Don’t touch high-collateral lending (such as Compound): interest rate fluctuations can easily trigger liquidation.
Don’t touch MEME coins: liquidity is as thin as paper, and there are no signs of big investors dumping the market.
Don’t touch cross-period arbitrage: the basis may be reversed due to volatility.
Big H Conclusion: Harvest Emotions with Probability Advantage
CPI is not the end point, but the starting point of fluctuation!
If the data is negative → the sharp drop is due to institutions giving away money (the cost of 100,000 USD BTC is lower than that of mining machines);
If the data is positive → The surge is an acceleration of the trend (Standard Chartered has already revealed the target of 200,000 USD);
If the data is neutral → Trade time for space (expectations of rate cuts will only be postponed but will not disappear).
Data verification: CME FedWatch/Glassnode on-chain clearing map (as of July 14, 2025)
Disclaimer: No investment advice. Foolish people bet on the direction, while wise people calculate the probability.
