Bitcoin has climbed back toward the $65,000 level after softer-than-expected U.S. inflation data sharply reduced market expectations of a Federal Reserve rate hike at the July policy meeting.
Summary
- Bitcoin climbed toward $65K after June U.S. inflation came in below expectations.
- Cooling CPI data pushed July Fed rate hike odds sharply lower across major markets.
- Investors now await Kevin Warsh’s testimony and PPI data as geopolitical risks persist.
According to the U.S. Bureau of Labor Statistics, the consumer price index (CPI) slowed to 3.5% year over year in June, below the 3.8% economists had expected. Monthly CPI fell 0.4%, compared with forecasts for a 0.1% decline. The inflation report triggered a fresh move higher in risk assets, helping Bitcoin recover from losses linked to renewed geopolitical tensions.
Bitcoin (BTC) rose nearly 5% to an intraday high of $64,830 on July 14 before easing to around $64,560 at press time. The recovery followed a drop below $62,000 during the previous session, when escalating conflict between the United States and Iran weighed on market sentiment.
Core inflation data also came in below forecasts. The Bureau of Labor Statistics reported core CPI at 2.6% year over year and flat on a monthly basis, compared with expectations of 2.8% and 0.2%, respectively.
The latest figures improved from May, when headline CPI stood at 4.2% year over year, and core CPI reached 2.9%, adding to expectations that inflation pressures may be easing despite the ongoing conflict in the Middle East.
Cooling inflation has lowered expectations for a July rate hike
Interest-rate expectations changed quickly after the inflation release. According to CME FedWatch data, traders now assign only a 16.6% probability to a Federal Reserve rate hike at the July Federal Open Market Committee meeting.
Prediction markets also adjusted their outlook. Data from Polymarket showed the perceived probability of a July rate hike falling to 9%, down from as high as 34% previously. The platform also showed the chance of at least one rate hike during 2026 declining to 53%, compared with a recent peak of 71%.
The inflation report arrived only days after Federal Reserve Governor Chris Waller indicated he could support higher interest rates if inflation remained elevated. Against that backdrop, the weaker-than-expected CPI figures reduced expectations that policymakers would tighten policy this month, providing support for Bitcoin and other risk-sensitive assets.
Attention has now turned to Federal Reserve Chair Kevin Warsh, who is scheduled to testify before Congress over two days. Investors are also preparing for the producer price index (PPI) report, which could influence expectations for future monetary policy and lead to fresh volatility across cryptocurrency markets.
Geopolitical risks continue to limit upside
Even with inflation easing, macro risks remain in focus. Recent weakness in Bitcoin followed renewed fighting involving the United States and Iran, while President Donald Trump’s decision to reinstate the Iranian blockade added pressure to global markets before the CPI-driven rebound.
Another source of uncertainty comes from Trump’s proposal to impose a 20% cargo fee on ships that receive U.S. assistance while transiting the Strait of Hormuz. Market participants have warned that any disruption to shipping through the waterway could tighten global oil supplies and complicate the inflation outlook in the months ahead.
As a result, softer inflation has improved the immediate outlook for cryptocurrencies by reducing expectations of a July rate increase, but upcoming Federal Reserve commentary, fresh inflation data and developments in the Middle East remain key factors that could determine whether Bitcoin can extend its recovery toward the $65,000 level.
