Bitcoin surged past $65,000 on Tuesday following new US inflation data that indicated consumer prices cooled significantly in June. The move eased market concerns about another interest rate increase from the Federal Reserve this month. During the day, bitcoin traded as high as $65,100, marking a daily gain of more than 4%.
Inflation drops more than forecast
The US Bureau of Labor Statistics reported that the Consumer Price Index fell by 0.4% in June, the sharpest monthly decline since April 2020. This result exceeded economist expectations, who had anticipated only a 0.2% fall. On a yearly basis, inflation eased to 3.5%, down from 4.2% in May. The latest figures mark the first drop after inflation reached a three-year high in the previous month.
Declining energy costs were the biggest driver of the slowdown, with gasoline prices dropping more than 9% in June. These decreases countered modest increases in food and shelter expenses.
Market reaction and crypto performance
Ether, the native cryptocurrency of the Ethereum network, outpaced bitcoin’s rally, rising nearly 7% to approximately $1,895. Both assets appeared to benefit from the prospect of a less aggressive stance by the Federal Reserve on monetary tightening.
Recent surges in energy prices, fueled by tensions between the US and Iran, had contributed to inflation throughout the spring. This previously prompted market participants to anticipate further rate hikes, a scenario that tends to weigh on riskier assets like cryptocurrencies. The fresh inflation data, however, relieved some of those pressures.
| Asset | Price Change (Daily) | Current Price |
|---|---|---|
| Bitcoin (BTC) | +4% | $65,100 |
| Ether (ETH) | +7% | $1,895 |
Fed outlook and ongoing risks
Traders now assign higher odds that the Federal Reserve will keep its policy rate steady, maintaining it between 3.5% and 3.75% at this month’s meeting, according to data from CME FedWatch. However, many in the market still expect the central bank to consider a 25-basis-point increase at its September meeting.
Last month, statements from the Warsh Federal Reserve indicated a more hawkish policy path despite recent data. US military officials announced Tuesday that preparations were underway to reinstate a blockade on Iranian ports, following a series of strikes near the strategic Strait of Hormuz.
Ongoing geopolitical tensions and the potential for resurgent energy prices continue to weigh on investor sentiment, especially for risk-sensitive assets such as cryptocurrencies.
Bitcoin broke above $65,000 as softer-than-expected US inflation data reassured markets and eased speculation over an imminent Fed rate hike.
Mini dictionary: CME FedWatch, a real-time tool used by traders to gauge market expectations for future Federal Reserve interest rate moves based on Fed funds futures pricing.
The next policy decisions and geopolitical developments remain in focus, as traders continue to assess the outlook for inflation, interest rates, and digital asset performance in coming months.
