Key TakeawaysBitcoin spiked to $114,731 as U.S. CPI data came in line with expectations.Fed rate cut bets strengthened, with markets now pricing in 75 bps of cuts by year-end.Traders remain divided: some see BTC heading higher, others expect a dip to trap late longs.Bitcoin Reacts to CPI DataBitcoin (BTC $114,649) saw sharp volatility at Wall Street’s open on Thursday as U.S. inflation data matched forecasts. The August Consumer Price Index (CPI) rose 0.4%, its highest level since January, while jobless claims surged to 263,000 — the weakest labor print since October 2021.Markets interpreted the data as reinforcing expectations of a Federal Reserve rate cut on Sept. 17, with CME FedWatch showing an 11% chance of a 50 bps move. “Markets are now pricing in 75 basis points of rate cuts by year-end,” noted The Kobeissi Letter.BTC/USD briefly topped $114,700, its highest level since Aug. 24, before consolidating.Traders Turn Optimistic, but Caution RemainsCrypto traders leaned bullish after the CPI release.“Inflation not as bad as expected — bring on the rate cut later this month. News now behind us, time to resume the scheduled program: higher,” analyst Jelle posted on X.Others highlighted critical support levels. BitBull noted that Bitcoin had flipped $113,500 from resistance into support, calling it a “crucial reclaim” that could open the door to $117K and new all-time highs.Could BTC Repeat Past CPI Fakeouts?Not all analysts share the bullish outlook.Trader Skew warned of a possible long squeeze, pointing to 2,000 BTC in liquidity on exchange order books that could trigger a washout before higher prices.Similarly, investor Ted Pillows pointed out that the last three CPI releases saw BTC pump into the data and sell off afterward. “This time BTC has rallied before CPI data — which means a dump could happen,” he wrote.What’s Next for Bitcoin?With $113.5K reclaimed as support, traders now eye $117K as the next resistance before a retest of all-time highs near $124K. On the downside, failure to hold $113.5K could expose BTC to a dip toward $110K.As markets weigh weakening jobs data against sticky inflation, the Fed’s September decision may define Bitcoin’s next big move.