Bitcoin
and other cryptocurrencies rose on Wednesday after data showed inflation cooling more than expected, which could prompt the Federal Reserve to raise interest rates less than feared .
The price of
Bitcoin
has gained 1% over the past 24 hours to $30,750, on the upper end of a trading range between $30,000 and $31,000 that has dominated for weeks now. The largest digital asset just notched its best first six months of a year since 2019, but recently has been stagnating and unable to reclaim April’s high of $31,500.
Traders had hoped that Wednesday’s inflation data could catalyze a big move, with Bitcoin spiking to nearly $31,000 immediately after the print before settling. But more gains could be coming as markets digest the implications, especially since Bitcoin already had the wind in its sails.
“Bitcoin is gaining momentum,” said Alex Kuptsikevich, an analyst at broker FxPro, ahead of the inflation release. “Bitcoin is up at $30,800 and is approaching the upper boundary of its short-term range at $31,400. Only a break above this level will indicate that the market is ready for further gains, with potential targets near $35,500 by the end of the month.”
The U.S. consumer-price index (CPI) for June moved Bitcoin higher, just as it buoyed the
Dow Jones Industrial Average
and
S&P 500.
This critical measure of inflation is being closely watched by investors at a time of shifting expectations over the Federal Reserve’s next moves on interest rates. While another rate hike is all but priced in for July, the latest inflation print could solidify expectations for what comes after that—whether the Fed is finished raising rates in its battle against inflation or if more increases are ahead.
The Fed’s campaign of rate hikes that began in March 2022—the most aggressive tightening cycle in a generation—was a major headwind for risk-sensitive assets like stocks and cryptos, so the outlook for inflation remains key.
The CPI release showed headline inflation at just 3% year-over-year in June, down from 4% in May and below economists’ expectations of 3.1%. The data immediately prompted traders to trim their bets on a rate-hike in September, with the chances of rate cuts in early 2024 rising sharply.
“We’re now in an environment when macro trumps everything,” said Antoni Trenchev, co-founder and managing partner at crypto lender Nexo. “Investors will be hoping Bitcoin’s price mirrors its ascent in the wake of the June 13 inflation report when it closed below $26,000 before launching itself to a 13-month high of $31,500.”
Beyond Bitcoin,
Ether
—the second-largest crypto—rose 1% to $1,890. Smaller cryptos or altcoins were more muted, with
Cardano
up less than 1% and
Polygon
slipping less than 1%. It was more of the same with memecoins, as
Dogecoin
traded just above flat and
Shiba Inu
shed less than 1%.
Write to Jack Denton at [email protected]
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