Why Is Bitcoin Down Today? BTC Price Drops Dramatically After Testing $123K, As Markets Await US Inflation Data

After making history by beginning the third week of July above $120,000 per coin, Bitcoin’s (BTC) price hit the ceiling at $122,600 on Monday, marking its highest valuation to date. 

The world’s largest cryptocurrency by market capitalization is currently trading in the $117,000 range, but this is because the market is weighing in on the upcoming US inflation data, due to be released on Tuesday.

Economists Expect US Inflation for June to hit 2.6% as Trump Calls for Fed Chair Jerome Powell to Cut Rates or Resign

Experts are expecting June’s cost-of-living numbers to tick up against the backdrop of President Trump’s tariff war with America’s global trading partners. Economists predict that the consumer price index (CPI) will rise 0.25% on a monthly basis, equating to a 2.6% annualized growth. The core CPI, which excludes volatile food items and energy, is forecast to rise 0.3% monthly and 3% annually.

Fed chairman Jerome Powell has maintained a hawkish stance on the economy, refraining from making rate cuts, and is under increased pressure to do so by Trump. While speaking to reporters on Sunday, the President said Powell “is always too late”, referring to the pace at which the central bank has reduced rates, which he argues should be the lowest for the US compared to the rest of the world due to the high performance of the economy.

Trump has been calling for the Fed chair to resign, saying that he is “very bad for the country”. The White House is already exploring candidates for the position, and reports indicate that Powell may be preparing to leave his position. Some Fed insiders, such as Michelle Bowman, vice chairman for supervision, have shown openness to lowering the interest rates this month.

The Federal Open Market Committee (FOMC) is set to meet today and announce the CPI and Producer Price Index (PPI) numbers for June, and also make a decision on dollar interest rates.

If inflation accelerates, risk assets, including Bitcoin, are expected to suffer a dip, further delaying chances of the Federal Reserve announcing interest rate cuts. However, the downside pressure on BTC could be limited given the strong momentum seen in terms of corporate adoption through spot Bitcoin ETFs and a positive regulatory outlook for crypto in the United States.

Crypto Investment Products See $3 Billion in Weekly Inflows, Led by Spot Bitcoin ETFs with $2.7 Billion

Meanwhile, digital asset investment products in the US have been busy breaking records. Last week, the funds attracted $3.7 billion in inflows, the second-largest figure on record. According to data shared by CoinShares, these flows were only topped by those in the week ended December 6, 2024, when they hit $4 billion and Bitcoin reached the $100,000 mark for the first time.

The previous week also marked the 13th consecutive week of gains by crypto investment products, taking the total assets under management (AUM) past $200 billion for the first time since their launch last year.

However, there have been regional disparities as US-listed funds dominated the inflows with nearly $3.74 billion, while Germany and Sweden, in second and third place respectively, lagged well behind with $85.7 million and $15.7 million in inflows. This underscored a growing divergence in global institutional sentiment for Bitcoin and other crypto assets.

BTC-backed products accounted for $2.7 billion of the inflows, taking their total AUM to $179.5 billion. CoinShares noted that this figure is equivalent to 54% of the AUM held by gold-backed ETFs, which stands at $383 billion.

Spot Bitcoin ETFs issued by Wall Street investment giants like BlackRock and Fidelity have helped fuel institutional demand for Bitcoin. Meanwhile, nations across the world are following America’s lead to embrace BTC as a strategic reserve asset or enact digital asset-friendly laws to support the industry. The demand for crypto assets has never been greater.

Also Read: Will Bitcoin Climb or Crash? -Bitcoin Holds Critical Level, The $108K  Question

Vanguard Buys 20 Million Shares in Michael Saylor’s Strategy Despite Previous Anti-Bitcoin Stance

The rise in institutional appetite for crypto products in the US was exemplified by asset management giant Vanguard’s evolving stance on the digital asset class. The long-time Bitcoin skeptic, who once called it an “immature asset class” inappropriate for long-term investors, has become the largest shareholder of Strategy (MSTR), the world’s largest corporate Bitcoin holder.

The $10 trillion money manager, through its various funds, now owns 20 million MSTR shares, which represent 8% of the company’s outstanding common stock. Strategy, formerly known as MicroStrategy, has become a proxy for betting on BTC as the software firm’s main business strategy over the past five years has been obtaining the apex cryptocurrency for its treasury. Consequently, the price of MSTR has risen along with Bitcoin’s, driving other publicly-listed companies, especially ones with diminishing revenues, to pursue crypto treasury strategies.

On Monday, the company founded by Michael Saylor purchased 4,225 BTC for $472.5 million at an average price of $111,827 per coin, bringing its total holdings to 601,550 BTC, valued at $70.59 billion. 

According to Bitcoin Treasuries, Strategy is the largest corporate Bitcoin holder, and the second-largest holder overall behind BlackRock’s iShares Bitcoin Trust ETF (IBIT), which has an AUM of 706,008 BTC. The data also shows that around 265 public, private, and government entities currently hold 3.51 million BTC in their treasuries, led by the US, Canada, UK, Germany, and China, respectively.

Bitcoin Outperforms Luxury Watch Market as it Transforms Into an Institutional-Grade Asset

Bitcoin is up nearly 28% year-to-date and 13.22% in the past month, outperforming the luxury watch market’s modest 4.5% rebound in Q2 2025. A recent report authored by analysts at Morgan Stanley and WatchCharts noted that both BTC and watches tend to benefit from “expansionary monetary environments and periods of wealth creation”.

While the global investor risk appetite has improved this year, analysts pointed out that speculative capital wasn’t flowing evenly. BTC managed to attract more of the macro-driven bid, with institutional inflows and 24/7 liquidity making it the preferred high-beta asset, while price recovery for watches remains narrow and concentrated among high-end collectors. 

The pandemic-era correlation between Bitcoin and luxury watches broke down early last year with the approval of the US spot Bitcoin ETFs. Bitcoin has since matured into a macro-sensitive, institutional-grade asset, while watches returned to their roots in fashion.

At the time of writing, Bitcoin (BTC) is trading at $117,026, down 4.15% in the last 24 hours.