Bitcoin Rebounds as U.S. CPI Falls to 3.5%, Below Expectations
Highlights
- U.S. CPI fell to 3.5% in June, below expectations of 3.8%.
- Core CPI fell to 2.6%, below expectations of 2.8%.
- Bitcoin has broken above $63,000 amid the lower-than-expected inflation data.
Bitcoin has rebounded above the psychological $63,000 level following the release of the June U.S. CPI data, which came in lower than expectations. This has notably reduced the odds of a potential Fed rate hike at the July FOMC meeting, which is a positive for the crypto market.
Bitcoin Bounces On Lower-Than-Expected U.S. CPI Data
U.S. Bureau of Labor Statistics data show that the U.S. CPI fell to 3.5% year-over-year (YoY) in June, below expectations of 3.8%. At the same time, the inflation data fell to -0.4% month-over-month (MoM), below expectations of -0.1%.
Meanwhile, core CPI came in at 2.6% YoY and 0.0% MoM, both below expectations of 2.8% and 0.2%, respectively. This latest inflation reading represents a huge positive for Bitcoin as CPI and core CPI came in at 4.2% and 2.9% YoY, respectively, in May. As such, this latest reading signals that inflation may again be cooling despite the ongoing U.S.-Iran war.
The U.S. CPI was also in focus this week, as Fed Governor Chris Waller signaled he may support a rate hike if inflation remains elevated. Bitcoin notably climbed on the back of the release of this CPI inflation data.
The leading crypto is currently trading at around $63,700, up over 2% from an intraday low of around $62,000. BTC had dropped below $62,000 yesterday as the U.S.-Iran war escalated again, with Trump reinstating the Iranian blockade.
Odds Of A Rate Hike Fall
The odds of a Fed rate hike at the July FOMC meeting have fallen following the release of the U.S. CPI data, which is bullish for Bitcoin. CME FedWatch data shows only a 14.4% chance that the Fed will hike rates later this month.
Odds of a rate hike this year have also fallen on the top crypto prediction market platform Polymarket. Polymarket data now shows only a 7% chance of a hike at the July meeting, down from as high as 34% and a 55% chance of a hike this year, down from a recent high of 71%.
The market will now turn its attention to Fed Chair Kevin Warsh’s testimony at Congress today and tomorrow for hints about the direction of monetary policy. PPI inflation data drops tomorrow, which is likely to spark volatility in Bitcoin and other crypto prices.
Meanwhile, BTC and the broader crypto market still remain at risk of a downtrend as the U.S.-Iran war resumes. President Trump has also proposed imposing a 20% cargo fee on ships that the U.S. helps transit the Strait of Hormuz, which could further disrupt global oil supply.
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