Bitcoin Rises Above $65,000 as Inflation Posts Its Largest Monthly Drop Since 2020

Bitcoin rose above $65,000 on Tuesday after US inflation data showed consumer prices cooling far more than expected in June, easing fears that the Federal Reserve will hike rates this month. Bitcoin traded as high as $65,100, up over 4% on the day. Ether, meanwhile, outran bitcoin, jumping nearly 7% to around $1,895.

The Consumer Price Index fell 0.4% in June, the U.S. Bureau of Labor Statistics reported Tuesday, the largest one-month decline since April 2020 and well beyond the 0.2% dip economists had penciled in. On an annual basis, inflation slowed to 3.5% from 4.2%, the first cooldown after May’s three-year high. Falling energy costs did most of the work, with gasoline over 9% on the month, offsetting rises in food and shelter.

Energy costs tied to the US-Iran conflict had pushed prices higher through the spring, feeding expectations that the Fed might raise rates, a setup that typically pressures risk assets like bitcoin. A cooler read loosens that grip.

Traders are now more confident the Fed would leave rates in the 3.5% to 3.75% range later this month, per CME FedWatch, though many still expect a 25-basis-point hike in September.

The Warsh Fed signaled a more hawkish path last month, and the US military said Tuesday it was preparing to reimpose a blockade on Iranian ports after days of retaliatory strikes centered on the Strait of Hormuz.

Related Listen: The Fed Is Turning Hawkish. What Does That Mean for Bitcoin and Strategy?

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