Bitcoin has climbed above $65,000 after softer-than-expected U.S. producer inflation reduced expectations of a Federal Reserve rate hike later this month.
Summary
- Bitcoin climbed above $65,000 after weaker-than-expected U.S. PPI data boosted risk appetite.
- Cooling inflation reduced expectations of a July Fed rate hike in both traditional and crypto markets.
- Ethereum topped $1,900 as the total crypto market capitalization rose above $2.3 trillion.
According to data from the U.S. Bureau of Labor Statistics, June’s Producer Price Index (PPI) added fresh momentum to risk assets after inflation came in below economists’ forecasts.
The total crypto market gained more than 2% to climb above $2.3 trillion, while Bitcoin reclaimed the $65,000 level and Ethereum moved above $1,900 for the first time since early June. The latest move extends the rally that began after June’s Consumer Price Index (CPI) report also surprised to the downside.
Softer inflation cuts expectations for a July Fed rate hike
The Bureau of Labor Statistics reported that headline PPI fell 5.5% year over year in June, below the 6.2% consensus estimate. On a monthly basis, producer prices declined 0.3%, the sharpest monthly drop since April 2025. Core PPI, which excludes food and energy, rose 4.7% from a year earlier, also below the expected 5.1%, while the monthly increase slowed to 0.2%, missing expectations of 0.3%.
Coming one day after a softer CPI report, the latest inflation figures strengthened investor confidence that price pressures continue to ease. The June CPI release had already lifted Bitcoin and the wider crypto market after recording the largest monthly decline in consumer prices since April 2020.
Analysts have linked part of last month’s cooling inflation to lower energy costs following the now-ended ceasefire agreement between the United States and Iran.
The combination of weaker CPI and PPI readings has encouraged traders to reassess the Federal Reserve’s next policy move, with markets increasingly expecting policymakers to keep interest rates unchanged at their July meeting.
Rate markets and prediction platforms scale back tightening bets
Expectations for another Federal Reserve rate increase dropped further after the PPI report. According to the CME FedWatch Tool, traders now assign only a 10.2% probability of a rate hike at the July 29 Federal Open Market Committee meeting, down from roughly 16% following the CPI release and well below levels above 30% seen last week.
Crypto-based prediction markets have become even more confident that policymakers will stay on hold. Data from Polymarket places the probability of a July rate hike at just 4%, showing a wider gap between crypto traders and traditional interest-rate markets.
Markets have also lowered the probability of an additional rate hike before the end of 2026. CME FedWatch data shows those odds have eased to about 51%, compared with around 55% a day earlier and roughly 71% at last week’s peak.
Even with inflation data moving in a favorable direction, Federal Reserve Chair Kevin Warsh has urged caution. During testimony before the House on Tuesday, Warsh warned that one encouraging inflation report does not mean the central bank has completed its work.
According to his remarks, the Federal Reserve remains committed to returning inflation to its long-term 2% target before declaring victory over price pressures.
For crypto investors, however, the latest inflation releases have shifted attention back toward monetary policy. With both CPI and PPI surprising to the downside in consecutive sessions, digital assets have benefited from renewed expectations that borrowing costs may remain unchanged in the near future, supporting demand for risk-sensitive assets including Bitcoin and Ethereum.
Disclosure: This article does not represent investment advice. The content and materials featured on this page are for educational purposes only.
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