Bitcoin Ticks Up to $64K Following Largest Inflation Slowdown in Six Years

Bitcoin ticked above $64,000 on Tuesday morning after a widely viewed inflation gauge showed consumer prices cooled more than expected in June. This reinforced expectations that the Federal Reserve will leave interest rates unchanged at the end of its next policy meeting.

The consumer price index fell 0.4% month on month in June, the US Bureau of Labor Statistics reported said on Tuesday. Economists expected the index, which tracks price changes across a wide range of goods and services, to show a decline of 0.1% over the period.

After the publication of the report Bitcoin held steady around $64,300, up 2.3% on the day, according to CoinGecko data. Nevertheless, Bitcoin’s price increase lagged behind Ethereumwhich rose 5.4% to around $1,890 over the same period.

The biggest one-month drop in consumer prices since April 2020 was driven by falling energy costs, the inflation snapshot showed, which offset a rise in food and shelter costs. On an annual basis, inflation slowed to 3.5%, falling for the first time in five months.

Fabian Dori, CIO at crypto bank Sygnum, explains Declutter that the government’s latest inflation numbers marked a hopeful sign for crypto, and “represent the first real indication that the spring’s energy-driven momentum is fading rather than broadening.”

Cooler than expected

As conflict in the Middle East put pressure on global energy supplies, investors braced for tighter monetary conditions, expecting the U.S. central bank to raise interest rates in an effort to prevent related price pressures from spreading to the broader economy.

So-called core inflation, which excludes volatile food and energy costs, stood at 2.6% in the 12 months to June, compared with 2.9% the month before. Earlier this year, the annual core measure fell to 2.5% in February before rising again in the spring.

Higher interest rates tend to weigh on risky assets like stocks and cryptocurrencies as the risk-free payouts on government bonds become relatively attractive. Conversely, expectations of accommodative monetary policy tend to support digital assets.

On Tuesday, traders grew more confident that the Fed would leave rates unchanged at a target range of 3.5% to 3.75%, monthly, later this month. CME Fed Watch. Still, they expected the US central bank to raise interest rates by 25 basis points in September.

As the war between the US, Israel and Iran has clouded the Fed’s path to reducing inflation to its 2% target, analysts – including Matt Mena, senior crypto research strategist at listed fund publisher 21Shares – have said the conflict could impact crypto prices.

“As long as tensions with Iran do not worsen, the fundamentals and catalysts are starting to align for a $100,000 upside by the end of the quarter,” he said. Declutter.

On Tuesday, the US military said it was preparing to reimpose the blockade of Iranian ports at 4pm Eastern Time. AP News. The development followed days of retaliatory attacks between the countries, centering on control of the crucial Strait of Hormuz.