CPI's Got a Hole in One: Bitcoin Bogeys Below $65K as Inflation Finally Takes a Mulligan 📉

Bitcoin climbed to nearly $65,000 on Wednesday, posting a 3.6% gain over 24 hours and trading around $64,800, after U.S. inflation data for June came in softer than economists had forecast and traders rapidly repriced the odds of a near-term Federal Reserve rate hike. The U.S. Bureau of Labor Statistics reported that the headline Consumer Price Index fell 0.4% month-over-month and 3.5% year-over-year in June, versus expectations of -0.1% and 3.8%, respectively. Core CPI, which excludes food and energy, printed at 0.0% MoM and 2.6% YoY, below consensus estimates of 0.2% and 2.8% and down from May readings of 4.2% headline and 2.9% core. The headline MoM decline was the largest one-month decrease in consumer prices since April 2020, driven by falling energy costs that offset increases in food and shelter.

The inflation report triggered a sharp shift in rate expectations, with implied odds of a Fed rate increase at the July FOMC meeting collapsing from 43% to 13% and the two-year Treasury yield falling six basis points. Traders continued to price in a 25-basis-point hike at the September meeting, per CME FedWatch, which showed the target range at 3.5% to 3.75%. 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," noting that investors had previously braced for tighter monetary conditions amid Middle East tensions involving the U.S., Israel, and Iran. Elsewhere, brent crude advanced 1% to above $85 a barrel, marking a third consecutive day of gains and an 11% surge over two sessions after President Trump threatened further strikes on Iran and the U.S. resumed its blockade of Iranian shipping through the Strait of Hormuz.

The move extended beyond Bitcoin, with Ether (ETH) rising 5.3% on the day and 7.1% over seven sessions to around $1,880, while Hyperliquid's HYPE gained 6.4% to $67, XRP added 3.7% to $1.10, Solana rose 3.6% to $78, dogecoin climbed 2.9%, and BNB added 1.9% to $579. Global equities followed the same risk-on cue, with MSCI's Asia Pacific gauge climbing 2.3% in its biggest advance in a month, South Korea's Kospi jumping 8.2%, and SK Hynix rising 13% in Seoul. Bitcoin's price action was accompanied by roughly $31 billion in 24-hour trading volume as the asset bounced from around $61,500 earlier in the week.

On-chain data, however, showed two distinct cohorts of BTC holders selling into the rally. Glassnode-defined long-term holders, wallets typically holding for at least five months, were capitulating and realizing losses as price approached $66,000, while short-term holders who bought near recent lows were taking profit at a pace exceeding $4 million per day, a pattern last seen when BTC briefly touched its 200-day average above $82,000 in May. The simultaneous selling from both groups created overhead supply even as macro conditions turned supportive, signaling that conviction remained fragile among investors still underwater from earlier in the cycle. The June Producer Price Index release, offering further cues on inflation, was also due this week.