Bitcoin price jumped over $65,500 on Wednesday following US inflation data showing producer prices fell in June. The Producer Price Index excluding food and energy declined 0.3% in June according to Bureau of Labor Statistics figures, posting its biggest drop in 14 months. Bitcoin was recently trading at $64,943, marking a 2% increase over 24 hours. The price surge reflects investor expectations of potential interest rate cuts when inflation shows signs of cooling, as crypto and other risk assets historically perform well in low-interest rate environments.
PPI Data Shows Biggest Decline in 14 Months
Data from the Labor Department showed the Producer Price Index posted its biggest decline in 14 months. The PPI excluding food and energy fell 0.3% in June according to Bureau of Labor Statistics numbers. Bitcoin's price over a seven-day period traded from $61,507 to as high as $65,501. Figures released on Tuesday from June's Consumer Price Index also showed inflation appeared to be easing in the US, leading to an additional jump in Bitcoin price.
US-Iran Tensions Add Volatility to Bitcoin Markets
President Trump stated this week the US would take control over the Strait of Hormuz. On Wednesday, the US leader vowed to intensify bombing until Tehran stops attacking ships in the Strait of Hormuz and agrees to open the waterway. "We're going to hit [Iran] very hard the night after," President Trump told Fox News on Tuesday. "And then next week it gets really bad for them because next week comes the power plants." He added, "The only way you can negotiate with these people is through strength." Bitcoin's price has faced increased volatility since the US and Israel attacked Iran on February 28, with the leading cryptocurrency dropping hard on initial reports of war.
Bitcoin Down 30% Year-to-Date Amid ETF Outflows
Since the start of the year, Bitcoin has shed nearly 30% of its value and is now close to 50% below the $126,080 record it notched in October. Downward pressure has been added to Bitcoin price as US investors fast cashed out of spot exchange-traded funds throughout the month of June. Inflation uncertainties and a boom in artificial intelligence-related stocks led speculators to put their cash elsewhere.
Federal Reserve Chair Warsh Commits to Price Stability
Kevin Warsh was sworn in as the new Federal Reserve Chair in May. The former Federal Reserve governor told congress this week that the Federal Reserve has "no tolerance for persistently elevated inflation" and that policy makers at the bank share "a resolute commitment to restoring price stability." Warsh has said he wanted to lower the cost of borrowing but markets initially priced him in as a hawk. At the time of writing, the bitcoin price is near $65,000.
FAQ
What caused Bitcoin price to jump over $65,500 on Wednesday?
Bitcoin price jumped over $65,500 following US Producer Price Index data showing a 0.3% decline in June excluding food and energy, the biggest drop in 14 months according to Bureau of Labor Statistics figures.
How much has Bitcoin declined since the start of the year?
Bitcoin has shed nearly 30% of its value since the start of the year and is now close to 50% below the $126,080 record it reached in October.
