Inflation in the U.S. showed an increase in June, impacting financial markets and cryptocurrencies. The latest consumer price index data confirms concerns about the slow decline of inflation.
June Inflation Data in the U.S.
In June, inflation in the U.S. rose by 0.3% month-over-month, up from a growth of 0.1% in May. Year-over-year, inflation reached 2.7%, the highest level since February. The Core Consumer Price Index, excluding food and energy, rose by 0.2% month-over-month and totaled 2.9% year-over-year.
Bitcoin's Reaction to Inflation
After the release of the data, Bitcoin dropped nearly 6%, sliding from a recent peak of $123,300 to around $116,227. Investors began to reassess their expectations regarding the Fed's next move. The chances of a rate cut in September fell from over 80% to 60%. Analysts at Bitunix noted: *“BTC has undergone short-term liquidation following a series of breakouts. Key support to watch: $117,000–$116,300. If this zone holds, a rebound may occur. If support breaks, the next key level lies at $110,500.”*
Political Factors Impacting the Market
Beyond the economic data, there is growing uncertainty around the Federal Reserve's policy. President Donald Trump has expressed dissatisfaction with Fed Chair Jerome Powell, raising the risk of his potential removal. Deutsche Bank's George Saravelos warned that such a move could trigger a 3-4% drop in the dollar and a spike in U.S. Treasury yields, adding more volatility to an already tense market.
The rise in June's inflation serves as a reminder that the cryptocurrency market could remain on edge. Elevated interest rates and political uncertainty continue to push investors towards safer assets like bonds.
