Inflation 'High Fever' Fails to Stop Rally? BTC Temporarily Loses 80,000 Mark, But Arthur Hayes Sees Peak of $126,000

TradingKey - CPI data exceeding expectations triggered Bitcoin's drop below $80,000, yet the BitMEX co-founder remains firmly bullish on BTC.

On May 13, Bitcoin ( BTC) prices experienced a correction following the release of April's U.S. CPI data, briefly falling below the critical $80,000 mark. This morning, Bitcoin's price hit a low of $79,933, though it has since recovered that level and is currently trading at $81,069. It is evident that bullish sentiment in the market remains high, perhaps as a bet on Warsh's future interest rate policies.

Bitcoin Price Chart, Source: CoinMarketCap

According to data released Tuesday by the U.S. Bureau of Labor Statistics (BLS), the April Consumer Price Index (CPI) rose 3.8% year-over-year, exceeding market expectations of 3.7% and hitting a three-year high. Meanwhile, core CPI, which excludes food and energy, rose 2.8% annually—also above the 2.7% forecast—marking its highest level since September last year.

Following the release of this macroeconomic data, market hopes for a Federal Reserve rate cut in 2026 have essentially evaporated. The prevailing view on Wall Street is that a cut in 2026 is nearly impossible, with Deutsche Bank being a prime example, suggesting the Fed may keep rates steady until 2028. Currently, the CME FedWatch Tool indicates a 97.1% probability that rates will remain unchanged in June, with traders pricing in a more than 65% chance of no rate cuts for the entire year.

Despite the slim likelihood of a Fed rate cut this year, BitMEX co-founder Arthur Hayes remains bullish on Bitcoin returning to its peak of $126,000 set last October. In his latest article, "The Butterfly Touch," Hayes noted that "driven by the imminent release of trillions of dollars and yuan in liquidity, a return to $126,000 is a foregone conclusion."

While Bitcoin may not receive liquidity from the Federal Reserve, it could come from other sources, such as the AI capital expenditure race between the U.S. and China, potential deregulation of the banking sector due to U.S.-Iran conflicts, or the Trump administration loosening credit for the election. These factors are precisely what drive Arthur Hayes's bullish outlook for Bitcoin.

Currently, the market has lost confidence in a Fed rate cut, but one variable cannot be ignored. The Senate has confirmed Kevin Warsh as a member of the Federal Reserve Board of Governors with a 51-45 vote; he will next face a separate Senate vote for the position of Fed Chair, expected before Jerome Powell’s term expires this Friday. Notably, Warsh was nominated by President Trump, who has previously explicitly demanded rate cuts. This political connection could potentially pressure Warsh into making new interest rate decisions.