Bitcoin and other cryptocurrencies took a slight hit after the latest US inflation numbers came out. Let’s break down what happened.
Inflation’s Back
US consumer prices rose for the second month in a row, fueling uncertainty about when the Federal Reserve might lower interest rates. The June numbers showed a year-over-year increase of 2.7%, the fastest pace since February. While some analysts called the numbers “close to consensus,” others pointed out that they weren’t as good as the previous month’s. This stronger-than-expected inflation data solidified the belief among many that the Fed will hold off on rate cuts.
Crypto’s Reaction
Bitcoin’s price dipped below $116,000 after hitting a record high above $123,000 just a day before. While some crypto traders viewed the inflation report as relatively neutral, others weren’t so optimistic.
Some analysts argued that the combination of rising goods prices and slowing services inflation could actually be good for investments in tech, crypto, and commodities. However, others weren’t convinced, suggesting that persistent inflation means the Fed will keep interest rates higher for longer.
Market Response
The bond market showed a modest reaction, with the 10-year Treasury yield climbing. The US dollar also strengthened. Despite this, the odds of the Fed cutting interest rates in September are still around 52%, according to market data. As of the time of writing, Bitcoin was trading around $116,175.