Key facts
- Bitcoin price increased above $63,000 following the release of U.S. CPI data.
- June U.S. CPI was 3.5% year-over-year, lower than the expected 3.8%.
- Core CPI for June was 2.6% year-over-year, below the expected 2.8%.
- The likelihood of a Federal Reserve rate hike in July has decreased significantly.
- The U.S.-Iran war and potential disruptions in the Strait of Hormuz pose risks to the crypto market.
Bitcoin experienced a rebound, surpassing the $63,000 mark following the release of lower-than-expected U.S. Consumer Price Index (CPI) data for June. The annual CPI figure fell to 3.5%, below the anticipated 3.8%, while the monthly rate decreased to -0.4%, also underperforming expectations of -0.1%. Core CPI also showed a cooling trend, coming in at 2.6% year-over-year and 0.0% month-over-month, both below forecasts.
This disinflationary signal is viewed positively for Bitcoin, as it reduces the probability of an immediate Federal Reserve interest rate hike. Data from CME FedWatch indicates only a 16.6% chance of a rate increase at the July FOMC meeting. Similarly, predictions on Polymarket suggest a 55% probability of a hike this year, down from a recent peak of 71%.
Despite the positive inflation news, the cryptocurrency market remains under pressure due to geopolitical tensions. The escalation of the U.S.-Iran war and President Trump's proposal for a 20% cargo fee on ships transiting the Strait of Hormuz could disrupt global oil supply and impact market stability.
Market participants are now awaiting further guidance from Fed Chair Kevin Warsh's testimony before Congress and the upcoming Producer Price Index (PPI) inflation data, which is expected to cause volatility.