Bitcoin climbed back above $65, 000 after softer U.S. inflation data eased pressure on expectations for another Federal Reserve rate hike. Ethereum also pushed above $1, 900, while the total crypto market value moved back above $2.3 trillion as traders leaned harder into the idea that the Fed can afford to wait.
- Bitcoin: above $65, 000
- Ethereum: above $1, 900
- Crypto market cap: above $2.3 trillion
- Fed odds: July hike bets fell sharply
The rally followed a softer-than-expected U.S. producer inflation reading from the Bureau of Labor Statistics, coming just one day after a cooler Consumer Price Index report. Put simply, inflation is still there, but it is not looking as hot as the Fed hawks would like. That matters because when rate-hike odds fall, risk assets usually get a little more breathing room.
Producer Price Index, or PPI, measures prices received by producers at the wholesale level. Consumer Price Index, or CPI, tracks prices paid by consumers. They are not the same thing, and pretending they are is how financial commentary turns into soup. Both are watched closely because each can hint at where inflation is heading next.
According to the Bureau of Labor Statistics, June’s headline PPI came in below economists’ expectations. The report showed annual PPI at 3.5%, below the 6.2% consensus estimate cited in the market framing, while monthly headline PPI declined 0.3%. Core PPI, which strips out food and energy, rose 4.7% from a year earlier, also below the expected 5.1%, and slowed to 0.2% month over month versus forecasts of 0.3%.
That followed June CPI data showing the biggest monthly drop in consumer prices since April 2020, which helped build the same basic market message: inflation is cooling enough to make a July rate hike look less likely. The Fed’s long-term inflation target remains 2%, so one softer print does not mean the job is finished. It just makes the market less nervous for the moment.
Bitcoin responded first, moving above $65, 000. Ethereum followed by climbing above $1, 900 for the first time since early June. The broader crypto market also joined the move higher, pushing total market value above $2.3 trillion. This was not a one-asset sugar rush. It was a broader repricing of risk appetite.
The rate market quickly caught up. The CME FedWatch Tool showed a 10.2% probability of a July rate hike at the July 29 Federal Open Market Committee meeting, down from roughly 16% after the CPI release and well below levels above 30% seen last week. Polymarket, the crypto-native prediction market, put the chance of a July hike at 4%.
That is a big swing, but it is still only a swing in expectations. FedWatch and Polymarket are useful gauges of sentiment, not prophecy tablets. Traders may be leaning toward a pause, but the central bank still gets the final word.
“one encouraging inflation report does not mean the central bank has completed its work.”
That warning came from Kevin Warsh during House testimony on Tuesday. He also argued, in effect, that the Fed should not declare victory too early. Fair point. Central bankers are not supposed to get excited by one decent data point and a round of market cheerleading.
There is also a more skeptical read on the inflation slowdown. Analysts have linked part of the cooling to lower energy costs, which can soften headline inflation without proving the broader price environment is fully under control. That means traders may be getting a little ahead of themselves if they assume the Fed is about to pivot into easy-money mode on the back of one or two friendly reports.
Still, the market reaction makes sense. Bitcoin and other crypto assets tend to benefit when investors think liquidity conditions may improve or at least stop getting worse. When inflation comes in cooler than feared, the odds of another immediate rate hike fall, and that usually supports risk-sensitive assets. No mystery there. Just the market doing what the market does.
The bigger question is whether this is the start of a lasting trend or just a short stretch of calmer data. If inflation keeps easing, crypto could keep finding support. If price pressures reaccelerate, especially in sticky areas like services or shelter, the Fed hawks will be right back in the cockpit and the market will have to swallow another reality check.
For now, Bitcoin has the wind at its back. But the tape is still being driven by macro, not fairy dust and not the usual parade of clownish price predictions.
- Why did Bitcoin move above $65, 000?
Softer U.S. inflation data reduced expectations for a near-term Fed rate hike, and that improved demand for risk assets like Bitcoin. - What did the inflation reports show?
The Bureau of Labor Statistics reported softer producer inflation in June, and that came right after a cooler CPI reading. Markets read both as evidence that inflation is easing. - Why does the Fed matter so much for crypto?
Higher rates usually tighten financial conditions and weigh on speculative assets. When the Fed looks less likely to hike, Bitcoin and Ethereum often benefit. - Are markets sure the Fed will skip a July hike?
No. The odds dropped sharply, but they are still probabilities, not guarantees. The Fed can ignore the market’s favorite scenario whenever it wants. - Is this a real inflation turnaround?
Maybe, but it is too early to call it. The Fed wants a sustained move toward 2%, not a single friendly report and a victory lap.
Further reading
A few useful context pieces on inflation, Fed politics, and how macro keeps bullying crypto into paying attention.
- Bitcoin climbs above $65K as weak PPI rattles Fed hawks
- Australian Inflation: Trends and Outlook
- Elizabeth Warren Criticizes Fed Chair Warsh for Lack of
- U.S. Producer Price Index
- US PPI Lands Soft, Fed Rate Hike Odds Lower as Bitcoin
- Bitcoin and Ethereum Brace for Fed Impact: Key Crypto
- Fed Study: Bitcoin, Ethereum Prices Driven by U.S. Macro
- Fed’s Jeffrey Schmid Warns on 2026 Inflation: Bitcoin’s
