Bitcoin (BTC) rebounded to around $64,800 on July 15, rising 2.3% that day. The catalyst was the June Consumer Price Index (CPI) released by the U.S. Bureau of Labor Statistics: the month-over-month decline was 0.4%, better than market expectations; on an annualized basis, inflation slowed to 3.5%, the first drop in five months. As inflation cooled, the market believed near-term rate-hike pressure eased, benefiting both stocks and crypto assets in tandem.
June CPI Data: Three Key Inflation Indicators All Beat Expectations
According to data released by the U.S. Bureau of Labor Statistics on July 15, the key figures for the June CPI were as follows:
CPI month-over-month: decline of 0.4% (vs. expectation of -0.1%, the largest single-month drop since April 2020)
CPI year-over-year: 3.5% (first decrease in five months; the prior five months all rose)
Core CPI year-over-year (excluding food and energy): 2.6% (from 2.9% last month)
Driven by falling energy costs, this decline offset increases in food and housing costs. Sygnum crypto bank Chief Information Officer Fabian Dori said in a statement that this is the first “real sign” that the “spring energy-driven tailwind is weakening rather than expanding”; the above is the analyst’s personal view.
CME FedWatch Rate Expectations and Geopolitical Risks
Based on CME FedWatch data, as of July 15 (Tuesday), traders were increasingly convinced that the Federal Reserve would keep the target range for its interest rate unchanged at 3.50%-3.75% at its meeting later this month; however, traders still expect the Fed to raise rates by 25 bps in September.
On geopolitical issues, the ongoing Middle East conflict among the United States, Israel, and Iran increases uncertainty along the path for the Fed to keep inflation on track toward its 2% target.
In a statement, Matt Mena, a senior analyst at 21Shares, said, “As long as tensions with Iran do not worsen, fundamentals and catalysts begin moving toward the end-of-quarter $100,000 goal” — the above is the analyst’s personal view and does not constitute investment advice.
FAQ
Why is the June CPI data bullish for Bitcoin and the stock market?
According to reports, cooling inflation reduced market expectations for the Fed’s aggressive rate hikes in the near term; rising interest rates typically pressure risk assets such as stocks and cryptocurrencies (because government bonds offer more attractive risk-free returns); conversely, easing rate-hike pressure benefits risk assets—Bitcoin rose 2.3% on the day, while the stock market also rebounded in tandem.
What is the Fed’s current interest rate, and what do CME FedWatch expectations show?
According to reports, the Fed’s current target range for the federal funds rate is 3.50%-3.75%; CME FedWatch data shows traders expect it to remain unchanged in July, but still expect a 25 bps rate hike in September; the specific rate decision will be based on the Fed’s official announcement.
Why did Ethereum’s upside outperform Bitcoin this time?
According to reports, Ethereum (ETH) rose 5.4% to about $1,890 on the day, while Bitcoin rose 2.3%; the article does not provide specific reasons for Ethereum outperforming, which may be related to a rebound in risk appetite after inflation cooled, as well as Ethereum’s own technical or ecosystem factors; the specific reasons will depend on later market analysis.
