Bitcoin Surge – Bitcoin Tops $59K Following Negative Inflation Report in the U.S. for June

Bitcoin Surge – Bitcoin Rallies to Over $59K Amid Negative U.S. Inflation in June

Bitcoin Surge – Inflation continued its retreat in June, according to the government’s Consumer Price Index (CPI) report released on Thursday morning. The June CPI rate showed a negative 0.1% change, contrary to forecasts of a 0.1% gain and May’s 0.0% reading. On a year-over-year basis, the CPI increased by 3.0%, slightly below expectations of 3.1% and May’s 3.3%.

Core CPI, which excludes food and energy costs, also performed better than anticipated. It rose by 0.1% in June, compared to expectations of 0.2% and May’s 0.2%. The year-over-year Core CPI was up by 3.3%, just below forecasts of 3.4% and June’s 3.4%.

Following the release of this report, Bitcoin (BTC) jumped to $59,100, marking a nearly 2% increase over the past 24 hours. This movement underscores the cryptocurrency’s sensitivity to economic indicators.

Market Response and Federal Reserve Speculations

Traditional markets also responded positively. U.S. stock index futures rose, the 10-year Treasury yield fell by nine basis points to 4.20%, and gold prices increased by 1% to $2,404 per ounce.

Before the report, market participants increasingly believed that the U.S. Federal Reserve would lower its benchmark fed funds rate at its mid-September meeting. The CME FedWatch tool indicated that the probability of a rate cut had risen to over 70%, up from less than 50% a month ago. Federal Reserve Chair Jerome Powell neither confirmed nor denied these expectations during his two days of Congressional testimony earlier this week.

Powell acknowledged a weakening labor market and highlighted the Fed’s growing focus on downside economic risks. However, he reiterated the need for continued confirmation that inflation is moving towards the 2% target before considering rate cuts.

Bitcoin’s Search for a Catalyst

Bitcoin has faced significant pressure in recent weeks. After reaching an all-time high above $73,500 late in the first quarter, the second quarter saw a slowdown in inflows and occasional significant net outflows into U.S.-based spot ETFs. The situation worsened in late June and early July due to a surge in supply from government holdings and the return of Mt. Gox tokens, causing Bitcoin’s price to drop below $54,000, nearly 27% below its record high.

This decline in Bitcoin is particularly frustrating for bullish investors, as other risk assets, especially U.S. stocks, have continued to surge. The S&P 500 and Nasdaq recently completed their seventh consecutive day of gains, setting new record highs for both indices.

Following the latest inflation figures, the odds for a September rate cut increased to 87%, with the chances for two or more rate cuts by the Fed’s November meeting rising to nearly 50%. Concurrently, the U.S. dollar index fell by nearly 1%, a significant move for this metric. Whether this situation will catalyze a fresh rally for Bitcoin remains to be seen.

FAQ on U.S. Inflation and Bitcoin Market Dynamics

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