Bitcoin nears $65,000 as cooling U.S. inflation guts the Fed rate-hike trade
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Bitcoin approached $65,000 after U.S. inflation data came in cooler than expected, easing market expectations for a near-term Federal Reserve interest rate hike. June’s headline inflation slowed to 3.5% from 4.2%, while core inflation, which excludes food and energy prices, fell to 2.6% from 2.9%. This broader easing reduced the anticipated probability of a July rate increase from 43% to 13%, causing Treasury yields to decline and triggering positive momentum in cryptocurrencies and global equities.
The impact on bitcoin was significant, with the price rising about 3.6% to nearly $64,800, marking its strongest single-day gain in weeks. Ether outperformed most major cryptos, increasing 5.3% to nearly $1,880, while other digital assets like XRP, Solana, and BNB saw gains ranging between 1.9% and 3.7%. These moves reflect continuing sensitivity of bitcoin and other risk assets to interest rate expectations. Lower inflation reduces pressure on the Fed to raise borrowing costs, making riskier assets more attractive relative to cash or Treasuries.
Despite this boost, analysts caution that the path forward remains uncertain. Core inflation remains above the Fed’s 2% target, meaning the central bank may pause but is unlikely to cut rates soon. The September Federal Open Market Committee meeting presents the next major milestone for assessing monetary policy direction. Additionally, whether bitcoin can maintain upside momentum depends partly on continued inflows through bitcoin ETFs and other institutional channels.
This episode underscores bitcoin’s dynamic relationship with macroeconomic factors, particularly U.S. interest rates, rather than positioning it as a hedge against economic shifts. The broader market response mirrored crypto’s, with global equities, especially in Asia Pacific tech sectors, also rallying. Overall, subdued inflation data has temporarily lifted risk appetite but leaves open questions on sustainability amid still-elevated core inflation and evolving Fed policies.