Bitcoin has jumped over $65,000 after softer-than-expected U.S. producer inflation data was released, reducing the odds of a Federal Reserve rate hike later this month.
Summary
- Bitcoin climbed above $65,000 as disappointing U.S. PPI statistics bolstered risk appetite.
- Weaker inflation diminished the chances of a Fed rate increase across both traditional and cryptocurrency markets.
- Ethereum exceeded $1,900, contributing to a total crypto market cap now over $2.3 trillion.
As reported by the U.S. Bureau of Labor Statistics, the Producer Price Index (PPI) for June provided a boost to high-risk assets as inflation figures fell short of economists’ forecasts.
The overall cryptocurrency market grew by more than 2% to surpass $2.3 trillion, with Bitcoin reclaiming the $65,000 mark and Ethereum rising above $1,900 for the first time since early June. This recent increase extends a rally that began with June’s Consumer Price Index (CPI) report, which also yielded surprising results.
Weaker inflation reduces expectations for a July Fed rate hike
The Bureau of Labor Statistics reported that the headline PPI declined 5.5% year-over-year in June, below the 6.2% consensus estimate. On a monthly basis, producer prices fell by 0.3%, marking the sharpest drop since April 2025. Core PPI, which excludes food and energy costs, rose 4.7% annually, again missing the expected 5.1%, with a monthly rise of just 0.2%, lower than the anticipated 0.3%.
Following a softer CPI report, the latest inflation figures have strengthened investor confidence that price pressures are subsiding. The June CPI report had already propelled Bitcoin and the broader cryptocurrency market, as it recorded the largest monthly drop in consumer prices since April 2020.
Analysts attribute part of last month’s declining inflation to lower energy costs following a ceasefire agreement between the United States and Iran.
The combined effect of weaker CPI and PPI figures has prompted traders to reassess the Federal Reserve’s upcoming policy decisions, with rising expectations that interest rates will remain unchanged at the July meeting.
Rate markets and prediction platforms lower tightening expectations
Crypto-centric prediction markets are even more convinced that the Federal Reserve will not implement any changes. Data from Polymarket shows a mere 4% chance of a rate hike in July, highlighting a substantial divergence between crypto traders and traditional interest rate markets.
Additionally, markets have decreased the probability of further rate hikes occurring before the end of 2026. CME FedWatch data indicates these odds have dropped to around 51%, down from roughly 55% the day before and about 71% at last week’s peak.
Despite favorable inflation trends, Federal Reserve Chair Kevin Warsh has called for a cautious approach. During a session before the House on Tuesday, Warsh warned that one positive inflation report doesn’t mean that the Federal Reserve’s work is complete.
He stressed that the Federal Reserve remains committed to reducing inflation to its long-term 2% target before declaring success over price pressures.
For cryptocurrency investors, the recent inflation updates have shifted focus toward monetary policy. With both CPI and PPI showing unexpected results in consecutive reports, digital assets have seen a resurgence in confidence, indicating that borrowing costs may hold steady in the near term, thus boosting demand for risk-sensitive assets like Bitcoin and Ethereum.
Disclosure: This article does not constitute investment advice. The information and materials provided on this page are for educational purposes only.
