Bitcoin edged up to approximately $64,000 following the release of June Consumer Price Index data that showed the largest slowdown in inflation in six years, according to market data, as cooling price pressures fueled expectations for Federal Reserve rate cuts in the coming months.
The CPI declined 0.4% month-over-month in June, driven largely by a 9.7% drop in gasoline prices. Core inflation, which excludes food and energy, came in flat at 0.0% month-over-month, below consensus estimates. The annual inflation rate fell to its lowest level in over three years.
The data provided a boost to risk assets across the board, with major equity indices also posting gains. Bitcoin rose from levels near $62,500 before the release to briefly touch $65,500 before settling near $64,000. The move represented a gain of roughly 2.5% on the day.
Cryptocurrency analysts noted that softer inflation readings tend to support Bitcoin prices by reducing the likelihood of further interest rate hikes and strengthening the case for rate cuts. Lower rates reduce the opportunity cost of holding non-yielding assets like Bitcoin and can weaken the U.S. dollar, which tends to benefit dollar-denominated alternative assets.
However, geopolitical tensions continued to cast a shadow over the market. Renewed U.S. military strikes on Iran-linked targets and trade frictions with China contributed to a cautious tone among some traders, limiting the upside following the CPI release.
The Federal Reserve’s next policy meeting is scheduled for late July, and markets are pricing in a roughly 65% probability that the central bank will hold rates steady, with the first rate cut expected in September. Bitcoin’s near-term trajectory will likely depend on whether upcoming economic data reinforces the disinflation trend.
This article was adapted from Decrypt. Read the original here.
