Bitcoin price reaches $64,000 after the largest inflation slowdown in six years

Bitcoin rose above $64,000 on Tuesday morning, after a widely watched measure of inflation showed consumer prices falling more than expected in June — boosting expectations that the Federal Reserve will leave interest rates unchanged at the conclusion of its next policy meeting.

The Consumer Price Index fell 0.4% month-over-month in June, according to the US Bureau of Labor Statistics He said Tuesday. Economists expected the index, which tracks price changes across a wide range of goods and services, to register a decline of 0.1% during this period.

After the report was issued, Bitcoin It settled at about $64,300, up 2.3% on the day, according to CoinGecko data. However, the rise in Bitcoin prices was delayed Ethereumwhich recorded a 5.4% increase to around $1,890 during the same time frame.

The inflation snapshot noted that the largest one-month decline in consumer prices since April 2020 was driven by lower energy costs, offsetting higher food and shelter costs. On an annual basis, inflation slowed to 3.5%, declining for the first time in five months.

said Fabien Dore, CIO at cryptocurrency bank Sygnum Decryption The latest inflation numbers released by the government are a hopeful sign for cryptocurrencies, and represent “the first real sign that the energy-driven momentum from the spring is fading rather than expanding.”

Colder than expected

As conflict in the Middle East pressures global energy supplies, investors braced for tighter monetary conditions, expecting the US central bank to raise interest rates in an attempt to prevent associated price pressures from spreading to the broader economy.

So-called core inflation, which excludes volatile food and energy costs, was 2.6% in the 12 months to June, down from 2.9% the previous month. Earlier this year, the annual core measure fell to 2.5% in February before rising again in the spring.

Higher interest rates typically impact riskier assets such as stocks and cryptocurrencies, as risk-free payments on government bonds become relatively attractive. Conversely, accommodative monetary policy expectations tend to support digital assets.

On Tuesday, traders became more confident that the Fed will leave interest rates unchanged later this month at a target range of 3.5% to 3.75%, per month. CME FedWatch. However, they expected the US central bank to raise interest rates by 25 basis points in September.

As the war between the US, Israel and Iran has clouded the Fed’s path to reining in inflation to its 2% target, analysts — including Matt Mina, chief cryptocurrency research strategist at exchange-traded fund source 21Shares — have said the conflict could weigh on cryptocurrency prices.

“As long as tensions with Iran do not escalate, the fundamentals and catalysts are starting to align with a $100,000 payment by the end of the quarter,” he said. Decryption.

The US military said on Tuesday that it is preparing to reimpose its blockade on Iranian ports at 4 p.m. Eastern time AP News. This development came after days of retaliatory strikes between the two countries, which focused on controlling the vital Strait of Hormuz.