Bitcoin climbed sharply as US inflation data revealed the biggest drop in the Consumer Price Index (CPI) since 2020, lifting risk assets and calming market fears of aggressive Federal Reserve rate hikes. The cryptocurrency surged above $64,000 early Tuesday during Wall Street’s open, reacting to a surprising decrease in inflation figures.
The US Bureau of Labor Statistics reported a CPI of 3.5% for June, lower than the predicted 3.8%. This marked the most substantial monthly inflation reduction since April 2020, driven primarily by a sharp 5.7% fall in the energy sector. The energy index’s decline outweighed increases in shelter and food prices, easing overall price pressures despite tension in the Middle East and the closure of the Strait of Hormuz oil route.
The positive inflation surprise fueled a broad rally in risk assets. US stock markets turned green, and crypto investors found renewed confidence amid expectations the Federal Reserve might slow its pace of interest rate hikes. Although the Federal Reserve’s own probability tool continues to favor a quarter-point rate increase in September, the market’s hawkish sentiment softened. Economist Mohamed El-Erian noted this shift could help rebalance overly aggressive monetary policy expectations.
Despite the bullish momentum, traders expressed caution over Bitcoin’s ability to break through key local resistance near $64,000. Data from CoinGlass showed crypto short liquidations exceeding $220 million in the past 24 hours, indicating traders closing bearish positions and easing downward pressure. Still, market participants described the current environment as range-bound, lacking clear direction beyond strong support and resistance levels.
Some analysts warned that Bitcoin’s gains could stall or reverse if it fails to reclaim and sustain above the weekly open price. One trader highlighted a “liquidity pool” just above $64,800, suggesting this level could halt upward moves. In this scenario, Bitcoin might form a “lower high” before retesting the $60,000 region, signaling potential short-term weakness despite recent gains.