Bitcoin Approaches $65,000 as U.S. Inflation Cools

Bitcoin Approaches $65,000 as U.S. Inflation Cools

Bitcoin surged nearly 3.6% to around $64,800 following the latest U.S. inflation report, which indicated a significant cooling effect on price levels. This unexpected decline in inflation has notably reduced the likelihood of a near-term interest rate hike by the Federal Reserve.

Inflation Data Impacts Market Sentiment

The June Consumer Price Index (CPI) revealed that headline inflation decreased to 3.5% from 4.2%, while core inflation – a measure excluding food and energy – fell to 2.6% from 2.9%. This cooling trend suggests that the inflation relief is not solely attributed to falling energy prices, thereby removing key justifications for the Fed to implement another rate hike.

Market Reaction to Fed Rate Hike Odds

As the inflation data surfaced, the implied odds of a Federal Reserve rate increase plummeted from 43% to 13%. This led to a noticeable drop in the two-year Treasury yield by six basis points. In response, Bitcoin enjoyed a 3.3% weekly increase, with approximately $31 billion traded over a 24-hour period.

Broader Market Effects

Other cryptocurrencies also experienced gains. Ether rose 5.3% to nearly $1,880, while Hyperliquid’s HYPE increased 6.4% to $67. Other notable movers included XRP, which climbed 3.7% to $1.10, and Solana, which was up 3.6% at $78.

Future Outlook and Analyst Insights

Analysts note that higher interest rates generally exert pressure on Bitcoin and similar risk assets. With the Fed’s potential rate hikes now appearing less likely, the conditions might favor a rebound in Bitcoin’s price. Jeff Ko, chief analyst at CoinEx, highlighted that the inflation report alleviates immediate downside risks but does not guarantee a lasting uptrend, as core inflation remains above the Fed’s target of 2%.

Looking ahead, the September Federal Open Market Committee (FOMC) meeting will be a critical event for determining the future trajectory of both interest rates and Bitcoin’s market behavior.