Bitcoin Reaches $64K Following Biggest Drop In Inflation In Six Years

Bitcoin traded above $64,000 on Tuesday morning, after a focus on inflation showed that consumer prices were cooler than expected in June – boosting expectations that the Federal Reserve will leave interest rates unchanged at the end of its next meeting.

The Consumer Price Index fell by 0.4% on a monthly basis in June, according to the US Bureau of Labor Statistics. he said the second. Economists had expected the index, which tracks price changes in a wide range of economic and employment sectors, to fall by 0.1% during that period.

After the report was released, Bitcoin rose to about $64,300, up 2.3% on the day, according to CoinGecko data. The rise in Bitcoin prices remained Ethereumwhich posted an increase of 5.4% to about $1,890 during the same period.

The largest drop in consumer prices for the month since April 2020 was due to lower energy prices, which reflected inflation, which offset higher food and accommodation prices. For the year, inflation fell to 3.5%, the first drop in five months.

Fabian Dori, CIO at crypto bank Sygnum, said Decrypt that the latest government inflation figures became a sign of crypto optimism, representing “the first sign that the energy from the spring is fading instead of expanding.”

Cooler than expected

As tensions in the Middle East squeezed global energy, investors pressed for tighter monetary policy, hoping the US central bank would raise interest rates in an attempt to prevent price pressures from spreading to other economies.

So-called core inflation, which strips out volatile food and energy costs, came in at 2.6% in the 12 months to June, down from 2.9% the previous month. Earlier this year, the annual rate fell to 2.5% in February before rebounding in the spring.

High interest rates often weigh on assets like stocks and crypto while risk-free yields on government bonds are attractive. In contrast, the expectations of the working capital policy tend to encourage the digital economy.

On Tuesday, traders grew more confident that the Fed will leave interest rates unchanged later this month at a target range of 3.5% to 3.75%, at CME FedWatch. However, they expect the US central bank to deliver a 25 basis point hike in September.

As the war between the US, Israel, and Iran has covered the path of the Fed to reining inflation to its 2% goal, experts-including Matt Mena, chief crypto research strategist at the exchange-sold fund provider 21Shares-say that the conflict can shape crypto prices.

“As long as tensions with Iran do not worsen, startups and startups are starting to put together $100k to push for the end of the quarter,” he said. Decrypt.

On Tuesday, the US military said it plans to reimpose its blockade of Iranian ports at 4pm Eastern Time. AP news. The development followed days of back-and-forth attacks between countries that control the vital control of the Strait of Hormuz.