Hassan Maishera
TL;DR
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Bitcoin climbed to nearly $64,800 after June's U.S. inflation report came in below expectations.
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Headline inflation eased to 3.5%, while core inflation slowed to 2.6%, reducing expectations of a Federal Reserve rate hike.
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Bitcoin gained 3.6%, while Ethereum jumped 5.3% and several major altcoins posted strong gains.
Bitcoin rallied to nearly $64,800 on Wednesday, recording its strongest session in weeks after softer-than-expected U.S. inflation data fueled optimism that the Federal Reserve may keep interest rates unchanged at its upcoming policy meeting.
The positive inflation report lifted sentiment across financial markets, driving gains in cryptocurrencies, equities, and other risk assets while sending Treasury yields lower.
US Inflation Cools Faster Than Expected
Fresh data showed U.S. headline inflation slowed to 3.5% in June, down from 4.2% in May.
Meanwhile, core inflation, which excludes food and energy prices, eased to 2.6% from 2.9%, signaling that price pressures are cooling beyond just lower energy costs.
The weaker inflation reading significantly reduced expectations that the Federal Reserve will raise interest rates later this month.
Following the report, market-implied odds of a July rate hike dropped sharply from 43% to 13%, while the yield on the two-year U.S. Treasury note fell by six basis points.
The improved macroeconomic outlook sparked a broad rally across the cryptocurrency market.
Bitcoin (BTC) rose 3.6% over the past 24 hours and was up 3.3% for the week, with approximately $31 billion in trading volume.
Other major cryptocurrencies also posted solid gains. The rally reflected renewed investor confidence as expectations for tighter monetary policy eased.
Why Lower Inflation Supports Bitcoin
Bitcoin and other cryptocurrencies are often viewed as risk assets that perform better when borrowing costs remain low.
Higher interest rates generally make low-risk investments such as cash and U.S. Treasury securities more attractive because they offer higher guaranteed returns. This can reduce demand for assets like Bitcoin, which generate no yield and tend to experience higher price volatility.
Conversely, softer inflation reduces pressure on the Federal Reserve to tighten monetary policy, encouraging investors to move back into growth-oriented and higher-risk assets, including cryptocurrencies.
Global Markets Rally Alongside Crypto
The positive inflation data also boosted traditional financial markets. MSCI's Asia Pacific Index climbed 2.3%, marking its strongest daily gain in a month as technology stocks led the advance.
South Korea's Kospi surged 8.2%, reclaiming its position as the world's best-performing major stock index this year.
Meanwhile, SK Hynix jumped 13% in Seoul after its American depositary receipts (ADRs) gained 27%.
In commodities, Brent crude oil rose more than 1% to trade above $85 per barrel, extending a three-day rally. Oil prices have surged roughly 11% over the past two sessions following renewed geopolitical tensions after President Donald Trump threatened additional military strikes against Iran and the United States resumed its blockade of Iranian shipping through the Strait of Hormuz.
Despite the encouraging inflation report, analysts caution that the Federal Reserve is unlikely to begin cutting interest rates immediately.
Jeff Ko, chief analyst at CoinEx, noted that Bitcoin continues to behave like a rate-sensitive risk asset rather than a traditional macroeconomic hedge.
According to Ko, the latest inflation figures help reduce immediate downside risks for Bitcoin but do not yet confirm a sustained bullish breakout.
With core inflation still above the Federal Reserve's 2% target, policymakers are more likely to maintain current interest rates than begin easing monetary policy.
Ko believes investors will closely monitor the September Federal Open Market Committee (FOMC) meeting, along with the direction of the U.S. dollar and spot Bitcoin ETF inflows, for clearer signals about Bitcoin's next major move.
