CPI Drops, Fed Hike Bets Get Rekt: Bitcoin Pops Above $64K While Ether Steals the Show 🚀

Bitcoin climbed about 3.6% to roughly $64,800 on Wednesday after U.S. inflation data for June came in well below expectations, sharply reducing market-implied odds of a near-term Federal Reserve rate hike. The U.S. Bureau of Labor Statistics reported that headline CPI fell to 3.5% year-over-year, down from 4.2% in May and below the 3.8% economists had forecast. Month-over-month, CPI dropped 0.4%, the largest one-month decrease since April 2020, versus expectations of a 0.1% decline.

Core CPI, which strips out volatile food and energy costs, eased to 2.6% year-over-year from 2.9% and came in flat at 0.0% month-over-month, compared with expectations of 2.8% and 0.2%, respectively. Falling energy prices drove much of the headline decline, offsetting higher food and shelter costs. Following the release, implied odds of a Fed rate increase at the July FOMC meeting collapsed from 43% to 13%, according to CME FedWatch, and the two-year U.S. Treasury yield fell six basis points.

Bitcoin ($BTC) traded around $64,300, up 2.3% on the day per CoinGecko data, with about $31 billion in 24-hour volume, while Ether ($ETH) outperformed with a 5.3% gain to near $1,880. Hyperliquid's HYPE rose 6.4% to $67, XRP added 3.7% to $1.10, Solana gained 3.6% to $78, Dogecoin climbed 2.9%, and BNB rose 1.9% to $579. Fabian Dori, CIO at crypto bank Sygnum, told Decrypt that the June print marked "the first real indication that the energy-driven impulse from the spring is fading rather than broadening."

Despite the risk-on rotation, traders continued to price in a 25-basis-point hike at the September FOMC meeting, and analysts flagged the September decision as the next major test for crypto positioning. Bitcoin remains highly sensitive to interest-rate expectations, with cooler inflation easing immediate downside pressure but leaving sustained ETF inflows and the Fed's path back to its 2% inflation goal as key factors to watch. Separately, New Hampshire Governor Kelly Ayotte signed HB 639, the Blockchain Basic Laws act, into law last week, establishing protections for cryptocurrency innovation and creating a special blockchain dispute docket in the state's superior court.