This is a daily analysis by CoinDesk analyst and Chartered Market Technician Omkar Godbole.

Major cryptocurrencies are looking bullish, with market leader bitcoin BTC$114,140.02 exhibiting a classic inverse head-and-shoulders breakout that could propel it toward $120,000.

But there’s a catch. The daily chart for the S&P 500 E-Mini futures is displaying a bearish pattern, indicating a potential sell-off that could weigh on the cryptocurrency market and trap bulls on the wrong side of the market.

S&P 500 hits record high with rising wedge

The E-mini futures have risen nearly 5% to a record high of $6,542 since Aug. 1. The slow ascent has taken the shape of a rising wedge pattern identified by converging trendlines connecting July 31 and Aug. 15 highs and lows reached on Aug. 1 and Aug. 22.

The converging trendlines indicate that bullish momentum is waning, increasing the likelihood of a sell-off.

When asked to identify and analyze the pattern on the S&P 500 futures, Google Gemini replied, “When a rising wedge, which is a bearish reversal pattern, appears after an extended rally to record highs, it significantly increases the probability of a sharp downside move. It suggests that buyers are exhausted and that the rally is running on fumes. The pattern indicates that the market is setting up for a major trend reversal rather than a simple pullback.”

Cryptocurrencies are known to closely track Wall Street sentiment, which means that a potential decline in the S&P 500 could weigh on bitcoin and other cryptocurrencies.

Inflation eyed

The odds of a breakdown in the S&P 500 could rise sharply if Thursday’s U.S. consumer price index (CPI) prints hotter than expected. Such a result, combined with the recent labor market weakness, may rekindle fears of stagflation—the worst-case scenario for risk assets—putting additional pressure on equities and cryptocurrencies alike.

The median forecast for the U.S. Consumer Price Index (CPI) in August 2025 is a 2.9% year-over-year increase (not seasonally adjusted), according to FactSet. If this estimate holds true, it will be the highest annual rise since January 2025, when the CPI reached 3.0% and well above the Fed’s 2% target. Additionally, this 2.9% figure would surpass the trailing twelve-month average inflation rate of 2.6%.

More importantly, the median estimate (year-over-year, not seasonally adjusted) for the core CPI, which excludes food and energy, is 3.1%.

BTC, ETH options are already biased bearish

The 25-delta risk reversals tied to Deribit-lited bitcoin and ether options were negative out to December expiry, according to data source Amberdata. In other words, short and near-dated BTC and ETH puts traded at a premium to calls, reflecting a bias for downside protection.

A put option protects the buyer from a decline in the value of the underlying asset. A call provides an asymmetric bullish exposure. The 25-delta risk reversal involves the simultaneous purchase of a put option and sale of a call, or vice versa.

According to Options Insights’ Founder, Imran Lakha, the put bias in BTC is likely due to institutions placing long-term hedges. Flows have continued to trend lower on the over-the-counter tech platform Paradigm.

“Flows again featured the [ETH] 26 Sep 4k put, lifted up to 73v,” Paradigm noted.

XRP is indecisive, DOGE looks north

While BTC’s inverse head-and-shoulders breakout suggests a strong bullish direction, XRP’s price action appears indecisive.

The payments-focused cryptocurrency remains locked in a descending triangle and continues to trade within the Ichimoku cloud. Together, these indicators suggest a period of consolidation and uncertainty.

A breakout from the triangle might invite stronger buying pressure, potentially leading to a re-test of $3.38, the swing high from Aug. 8. That said, the descending triangle, by itself, is generally considered a bearish pattern. That’s because the downward-sloping trendline connecting lower highs indicates that sellers are progressively getting stronger and could soon penetrate the horizontal support level.

Speaking of DOGE, it has retaken the bullish trendline from June lows, trapping sellers on the wrong side of the market. Additionally, prices have crossed into bullish territory above the Ichimoku cloud, which suggests scope for a test of the July high of 28.76 cents.

However, traders still need to watch out for a potential rising wedge breakdown in S&P 500 futures, as a reversal there could cap gains in DOGE and weigh on its price momentum.