Bitcoin Jumps, Then Stalls on CPI
Bitcoin’s price reaction to the latest U.S. inflation data was swift but short-lived. Early Tuesday, the cryptocurrency surged to a three-week high of $65,200, before pulling back to $64,741.78 by the end of the day. This represented a 3% gain over 24 hours, but a slight drop of 0.5% since midnight UTC. The rally mirrored the initial market enthusiasm after the Consumer Price Index (CPI) report showed that headline inflation fell more sharply than expected in June.
The June CPI declined 0.4%, compared to economist forecasts for just a 0.1% decrease and May’s 0.5% rise. On a year-over-year basis, CPI climbed 3.5%—lower than both the predicted 3.8% and May’s 4.2%. Core CPI, which strips out volatile food and energy prices, was flat in June versus an expected 0.2% uptick and rose only 2.6% annually, down from May’s 2.9%. These softer figures appeared to ease concerns about persistent inflation and set off a round of buying across risk assets.
However, as trading moved from Asian into European hours, Bitcoin’s momentum faded and it consolidated near $64,800—a level it would revisit on Wednesday as roughly $31 billion changed hands in BTC markets.
Fed Hike Bets Collapse After Data
The sharp drop in inflation metrics triggered an equally dramatic shift in expectations for Federal Reserve policy this month. According to coindesk.com, betting markets on Polymarket saw the odds of a Fed rate hike plummet from 34% before the CPI release to just 6.7% afterward; CME’s FedWatch tool showed similar skepticism with only a 14.4% probability of an increase based on futures prices.
On paper, the Fed could still surprise—but traders now see a 93% chance rates remain unchanged.
Bond markets reinforced this view: the U.S. two-year Treasury yield fell seven basis points to 4.19%, while the ten-year dropped five basis points to 4.56%. Lower yields typically favor riskier assets like crypto by reducing the appeal of cash and government bonds.
Ether Outpaces Bitcoin Amid Inflation Shift
While Bitcoin’s move captured headlines, Ether (ETH) quietly outperformed its larger rival during this macro-driven rally. ETH climbed nearly 5% over 24 hours on Tuesday and touched $1,895—the highest level seen since June 3—before settling near $1,880 by Wednesday morning. Over seven sessions, Ether advanced by more than 7%, compared to Bitcoin’s roughly 3% weekly gain.
Other major altcoins joined the advance: XRP rose by 3.7% to $1.10; Solana gained 3.6%, reaching $78; Dogecoin added almost 3%; and Binance Coin (BNB) ticked up nearly 2% to $579. Even smaller tokens like Hyperliquid’s HYPE posted notable moves—up over 6% on the day at $67—while PUMP jumped by more than 8% after investors absorbed a scheduled token unlock.
Despite these rallies, some uncertainty lingered as Middle East tensions offset optimism from softer U.S. data.
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Oil’s Climb Muddying Crypto Picture
One factor complicating the bullish narrative for crypto is oil’s recent surge: Brent crude advanced above $85 per barrel for a third straight sesson and has soared by an eye-catching 11% in just two days. Rising energy costs can reignite inflation fears and potentially limit how dovish central banks can be—even as headline data cools.
On paper, falling inflation should clear the way for risk assets like Bitcoin and Ether—but oil’s rally is a reminder that macro risks remain fluid.
The Key Lessons
- •U.S. June CPI fell 0.4%, versus a forecasted 0.1% decline, signaling softer-than-expected inflation.
- •Odds of a Federal Reserve rate hike this month dropped from 34% to 6.7% on Polymarket after the CPI release.
- •Bitcoin surged to a three-week high of $65,200 on Tuesday before consolidating near $64,800 as $31 billion traded hands.
Factors that could still shift
If Brent crude oil, which has surged 11% in two sessions to above $85 a barrel, continues to climb, it could immediately challenge the market’s current expectation—reflected in Polymarket’s 93% odds—that the Federal Reserve will leave rates unchanged at its next meeting this month; a sharp oil-driven inflation uptick before the Fed decision would likely prompt a reassessment of rate hike probabilities.