Key facts
- June CPI decreased by 0.4% month-over-month, bringing the annual rate to 3.5%.
- Core CPI remained flat month-over-month, cooling to 2.6% annually.
- Bitcoin surged past $64,000 and Ethereum rose to $1,884 following the inflation data.
- Fed Chair Kevin Warsh expressed caution about declaring victory over inflation.
- Bitcoin ETFs experienced $181 million in net inflows on Tuesday.
Cryptocurrencies experienced a significant rally following a cooler-than-expected Consumer Price Index (CPI) report, with Bitcoin and Ethereum seeing notable gains. The June CPI fell 0.4% month-over-month, marking the largest monthly decline since April 2020 and bringing the annual rate down to 3.5%, below the 3.8% expected. Core CPI also cooled to 2.6% annually and was flat on the month.
In response, Bitcoin surged from around $62,000 to reclaim $64,900, while Ethereum rose 7% to $1,884. Approximately $300 million in short crypto positions were liquidated as the market reacted positively to the inflation data. This print is the last major inflation reading before the Federal Reserve's upcoming meeting, potentially undermining the case for further rate hikes.
However, Federal Reserve Chair Kevin Warsh, in his first congressional testimony since taking over from Powell, urged caution. While acknowledging that the inflation surge of the past five years could become a thing of the past with correct policy, he stated that it is not his view that 'mission accomplished' has been achieved. Warsh reminded lawmakers that the committee has 'no tolerance' for persistently elevated inflation, suggesting a hawkish stance and leaving open the possibility of a rate hike later in the year.
In other crypto-related news, the SEC Crypto Task Force met with Hyperliquid's Policy Center to discuss regulation. JPMorgan noted that Hyperliquid's growth poses a threat to Circle's USDC economics, leading Mizuho to downgrade Circle to underperform with a $50 price target due to competition from Open USD. Despite this, Circle signed a memorandum of understanding with JCB, Japan's largest card network, to explore stablecoin payments. Coinbase reported that a significant portion of its code is now AI-assisted. Bitcoin ETFs saw $181 million in net inflows, and Ethereum ETFs received $58 million. Pump.fun completed its first major token unlock, releasing $86 million in PUMP tokens, and Binance is expanding its services to become a crypto 'super-app'.