Bitcoin prices rose today as traders awaited U.S. Consumer Price Index (CPI) data and the supply of Bitcoin on exchanges fell to a five-year low.

#BTC Prices rose today, stabilizing above the psychological support level of $30,000 as traders await key U.S. inflation data.

Steady inflation hopes keep Bitcoin rising

On July 12, BTC price saw a small daily increase of 0.68%, part of an ongoing rally that began on July 7. Since then, Bitcoin price has increased by nearly 3.75%.

Bitcoin’s rally comes ahead of the release of the U.S. Consumer Price Index (CPI) on July 12. A Bloomberg survey showed that most economists expect both headline and core inflation to continue to slow due to the Federal Reserve’s hawkish policies.

At its last meeting, the Fed decided to pause rate hikes, with Powell hinting that it would resume raising rates later if inflation data disappoints. But according to Bloomberg, the Fed may consider a longer pause if consumer prices cool.

Meanwhile, the U.S. dollar index (DXY) hit its lowest level since May, falling 2.15% for four consecutive days. The dollar's weakness against a basket of major foreign currencies suggests a slowdown in safe-haven demand among global investors.

Bitcoin is considered a risk-on asset and may have benefited in recent days given its continued negative correlation with the U.S. dollar in 2023.

BTC supply on exchanges drops

Bitcoin’s July 12 rally came as its exchange supply fell to its lowest level in five years.

The market views coins leaving cryptocurrency exchanges as a bullish signal as traders typically withdraw Bitcoin when they want to hold it for the long term.

Interestingly, on-chain data shows that Bitcoin holders have accumulated Bitcoin at a rate of nearly 27,000 BTC per month throughout 2023. In other words, most Bitcoin investors are positioning themselves for higher Bitcoin prices in the coming months.

Bitcoin price outlook for July

From a technical perspective, BTC/USD is targeting the $31,000-31,500 range for July. This range coincides with Bitcoin’s major resistance level, which is part of a sideways consolidation channel.

Conversely, if a reversal occurs now or after testing the $31,000-31,500 range, BTC price could test the channel’s lower trendline near $29,900 in July. Traders should focus on the Fed’s next interest rate decision on July 25-26 as a potential catalyst.