CPI Drops, Bitcoin Moonwalks Past $64K—Ethereum Outdances the OG 🌕

Bitcoin climbed above $64,000 on Tuesday after the U.S. Bureau of Labor Statistics reported that the Consumer Price Index fell 0.4% month-over-month in June, the largest single-month decline since April 2020. Economists had expected a 0.1% drop. Year-over-year, CPI slowed to 3.5%, down from 4.2% in May and below forecasts of 3.8%, marking the first annual decrease in five months. $BTC traded around $64,300, up 2.3% on the day, according to CoinGecko data.

Core CPI, which excludes volatile food and energy prices, came in at 2.6% year-over-year and 0.0% month-over-month, both below expectations of 2.8% and 0.2%, respectively. The Bureau attributed the monthly decline primarily to falling energy costs, which offset increases in food and shelter prices. $ETH outperformed during the same window, rising 5.4% to around $1,890.

Fabian Dori, CIO at crypto bank Sygnum, called the data "the first real indication that the energy-driven impulse from the spring is fading rather than broadening." Traders responded by pricing in a higher likelihood that the Federal Reserve will hold its target range of 3.5% to 3.75% at the upcoming FOMC meeting, according to CME FedWatch, while still anticipating a possible 25-basis-point hike in September. Fed Governor Christopher Waller had previously flagged the June CPI as a key input for policymakers navigating inflation alongside the U.S.-Iran conflict.

Bitcoin had broken above the $63,000 psychological level immediately after the data crossed the wires before extending gains into the $64,000 range. The move marked a notable recovery for $BTC as markets weighed the impact of geopolitical tensions on monetary policy and risk assets.