Bitcoin has recently dipped under five percent from its record high as market reactions to fluctuating US inflation rates continue to create uncertainty. The leading cryptocurrency is currently trading around $116,800, having seen a significant peak just above $123,000 the previous day.
The latest Consumer Price Index (CPI) released in June showed a monthly increase of 0.3 percent and an annual rise of 2.7 percent, matching estimates but indicating the fastest annual growth since February. Notably, the core CPI rose by 0.2 percent monthly and 2.9 percent annually, slightly missing projections for the monthly figure while conforming to the yearly trend.
In commentary on X, Wall Street Journal reporter Nick Timiraos noted that while the CPI data was “close to consensus,” it wasn’t quite as mild as the figures from May, highlighting core prices which increased by 0.23% in June, while headline prices saw a 0.29% rise.
According to analysts, this data seemed to bolster expectations that the Federal Reserve (Fed) may hold off on rate cuts. “With CPI inflation rising for the past two months to its highest point since February 2025, and a robust job market exceeding forecasts for three consecutive months, it seems unlikely that Fed Chair Powell will reduce rates anytime soon,” explained analysts at The Kobeissi Letter.
This sentiment was echoed by Christopher Inks from TX West Capital: “The consistent rise in CPI over two months excludes the possibility of rate cuts. Inflation shows no signs of easing.”
The Impact of Inflation on Bitcoin and Cryptocurrency Markets
Despite the rising inflation data, some cryptocurrency traders described the announcement as relatively neutral. “The CPI aligns mostly with expectations—core figures slightly lower while headline ones came in a bit higher. The market reaction is what will matter most,” stated Daan Crypto Trades.
Andreas Steno Larsen of Steno Research suggested that the combination of increasing prices for goods and a stabilization in service inflation might actually benefit riskier assets: “The June CPI sees an uptick in goods prices while the disinflation trend in services continues, creating a favorable environment for tech, cryptocurrency, and commodities in a reflationary context.”
Not everyone shares this optimistic view. One analyst, known as Charting Guy, commented, “Inflation remains persistent, and those calling for immediate rate cuts are only going to look foolish. Expect rates to stay HIGHER FOR LONGER.”
In the wake of this data, the Treasury markets saw a slight rally, with the 10-year yield climbing to 4.475 percent, while the US dollar index surpassed the 98.5 mark. Current futures indicate approximately a 52 percent chance for the Fed’s first rate cut occurring in September, based on CME FedWatch insights.
As of the latest update, Bitcoin was trading at $116,175, maintaining a close watch on inflationary trends that may impact its trajectory.
