Inflation Report Highlights
In June, inflation continued to decline, with the Consumer Price Index (CPI) registering a negative 0.1% compared to forecasts of a 0.1% increase. Year-over-year, the CPI rose by 3.0%, slightly below the expected 3.1%. Core CPI, excluding food and energy costs, increased by 0.1% in June, lower than the anticipated 0.2%. Year-on-year core CPI was up by 3.3% versus the forecasted 3.4%.
Market Reaction and Bitcoin Movement
Following the inflation report, the price of bitcoin (BTC) surged to $59,100, marking a nearly 2% increase over the previous 24 hours. Meanwhile, U.S. stock index futures rose, and the 10-year Treasury yield fell by nine basis points to 4.20%. Gold prices also climbed by 1% to $2,404 per ounce.
Federal Reserve’s Response
Prior to the report, there was speculation that the U.S. Federal Reserve might lower its benchmark fed funds rate at the mid-September meeting. The odds of a rate cut increased to over 70%. Fed Chair Jerome Powell, in his recent Congressional testimony, acknowledged concerns about a weakening labor market and downside risks to the economy. However, he emphasized the importance of confirming inflation returning to the 2% target before considering rate cuts.
Bitcoin Market Analysis
Bitcoin has faced pressure after reaching an all-time high above $73,500 earlier this year. Recent outflows from U.S.-based spot ETFs and the sale of government holdings contributed to a price drop to below $54,000. This decline occurred while U.S. stock markets continued to set new record highs.
Market Speculation and Future Outlook
Following the latest inflation data, the likelihood of a September rate cut increased to 87%, and the possibility of multiple rate cuts by November rose to nearly 50%. The U.S. dollar index also experienced a significant decline. The impact of these developments on bitcoin’s price trajectory remains uncertain, raising questions about potential catalysts for a bullish trend.