- Bitcoin fell nearly 6% as investors reacted to rising inflation.
- Fed rate cut odds dropped to 2.6% after hotter CPI release.
Bitcoin dropped sharply following the release of hotter-than-expected inflation data from the U.S. Bureau of Labor Statistics. The June Consumer Price Index (CPI) came in at 2.7% year-over-year, slightly above the 2.6% forecast. The Federal Reserve is now less likely to cut interest rates at its upcoming July meeting.
CPI Data Rattles Markets, Fed Rate Cut Odds Plummet
June’s CPI showed inflation rose 0.3% month-over-month, matching forecasts but up from 0.1% in May. The annual CPI rate rose to 2.7%, its highest level since February, marking the second consecutive monthly rise.
The core CPI, which excludes food and energy, also met expectations at 2.9% year over year and 0.2% month over month. This inflation uptick pressured market sentiment. The CME FedWatch Tool showed a sharp drop in the probability of a July rate cut, falling from 4.7% to just 2.6%. The chance of rates remaining steady surged to 97.4%.
Analysts linked the inflation spike to Trump-era tariffs and higher oil prices, especially amid tensions in the Middle East. According to The Kobeissi Letter, inflation has risen from 2.3% in April to 2.7% in June, largely driven by rising import costs and energy pressure.Â
Deutsche Bank analysts warned that political uncertainty, including speculation around Federal Reserve leadership, could add more market instability.
Bitcoin Volatile as Traders React to Inflation Signal
Bitcoin experienced immediate volatility after the data was released. The asset surged briefly to $123,300 before plunging nearly 6% to a low of $116,227. As of press time, BTC is trading around $116,334.61, down 3.49% from its all-time high.
Bitunix said Bitcoin liquidated after a series of breakouts. They highlighted $117,000–$116,300 as the support zone and below that, we could see $110,500.
Altcoins followed, with red across the board on the Crypto Bubbles dashboard. The total crypto market cap dropped to $3.71 trillion as everyone de-risked. The price action mirrored the broader markets, except the S&P 500, which broke above 6,300 for the first time.
Bitcoin is a rate-sensitive asset that is still vulnerable to changing Fed expectations. Inflation is rising, and policy uncertainty is increasing, so we’re expecting more volatility leading up to the July 30 FOMC meeting.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. CoinCryptoNewz is not responsible for any losses incurred. Readers should do their own research before making financial decisions.
