Bitcoin neared $65,000 on July 14 as U.S. inflation slowed more sharply than expected, reducing the likelihood of near-term interest rate hikes by the Federal Reserve.
data from crypto slate Once this report landed, BTC rose to $64,832, up about 4% from its intraday low and moving it closer to within $200 of the $200 threshold it has struggled to maintain over the past month.
This price performance follows a 0.4% decline in the consumer price index in June, the largest monthly decline since April 2020, according to the Labor Department. Prices rose 3.5% year-on-year, down from the 4.2% rise in May and below economists’ expectations for a 3.8% rise.
Core CPI, which excludes food and energy, was flat in the month, rising 2.6% year-on-year. This was also lower than expected and slowed from the 2.9% annualized rate recorded in May.
Jake Kenneth, Nansen Customs Senior Research Analyst crypto slate While this measure shows a clear improvement, it stops short of proving that inflation is on a sustained downward trajectory.
Kenneth said:
“The softening was primarily led by energy, which eased near-term pressure on the Fed ahead of the July FOMC meeting, supporting a bid for risk assets. That said, this is more of a cool thing than confirmation of sustained inflation decline.”
The energy decline behind CPI has already reversed
With Bitcoin reacting to an inflation report that accurately depicts June, the inflation booster could quickly run out of steam. The situation in June can only provide a rough guide for the formation of the price situation in July.
This is because the improvement that boosted Bitcoin was driven by the oil market, which changed significantly before the inflation report reached investors.
According to BLS data, energy prices fell 5.7% and gasoline prices fell 9.7% in June, contributing the most to the monthly decline in headline CPI. These declines came as oil prices fell on hopes that a tentative deal between the United States and Tehran would restore traffic in the Strait of Hormuz.
That reprieve has now ended as the United States reinstated its naval blockade against Iran after the U.S. military announced it had closed the strait following three consecutive nights of attacks on Iranian targets, firing missiles at U.S. allies and attacking commercial ships navigating the waterway.
Brent crude rose to more than $87 per barrel on July 14, but has since pared back its gains to trade around $85. West Texas Intermediate (WTI) hit an intraday high of $80.53, after both benchmarks hit new highs in nearly a month.
Patrick de Haan, head of oil analysis at Gasbuddy, described June’s CPI as a “rearview mirror” and said the decline reflected prices from a few weeks ago, with the recent rise in oil prices increasing the cost of crude and retail fuel.
The timing raises the possibility that headline inflation will recover as July’s gasoline, diesel and transport costs are included in the statistics. Rising oil prices could also spill over into supply chains for cargo, aviation, agriculture, and manufacturing.
A new energy shock could complicate Bitcoin’s attempts to break above $65,000, as it could reinvigorate expectations that the Fed will keep rates high or raise them again by the end of the year.
Warsh limits policy remedies
Federal Reserve Chairman Kevin Warsh told lawmakers on July 14 that monthly price fluctuations are inevitable, especially in a volatile global environment.
He said the central bank would not tolerate persistently high inflation and remained committed to restoring price stability.
According to Warsh,
“The Fed’s primary objective is to get monetary policy right, or as close to it as possible. That is our clear and abiding goal, the star we steer the ship from. And if we get policy right — and we will — the inflation spikes of the past five years will be a thing of the past.”
The Fed kept interest rates on hold at 3.5% to 3.75% in June after several officials expressed concern that energy costs could keep inflation high. The July 14 report weakened the case for a July rate hike, and the outlook for meetings beyond September remains open.
Warsh described the CPI report as one data point and rejected suggestions that it represented “mission accomplished.”
This restraint also limits how much traders can extend post-CPI gains based on expectations of monetary easing, leaving Bitcoin below a resistance area that has limited several recovery attempts since June.
Bitcoin’s $65,000 attempt faces oil test
Bitcoin now needs to build on the momentum it is building and convert the post-CPI rally into a sustained move through the $65,000-$66,000 resistance area.
Through repeated US attacks on Iran, BTC remained close to $62,000, avoiding the widespread liquidation cascade that followed previous geopolitical shocks.
Santiment data also showed that major Bitcoin stakeholders are exhibiting bullish behavior and accumulating the top cryptocurrency.
According to the company,
“Wallets holding between 10 and 10,000 BTC added approximately 11,000 BTC over the past week, a meaningful change as the whales and sharks in this tier have historically been closely aligned with price direction. Smaller retail wallets are also still primarily accumulating, indicating that bullish buying interest is still alive after several weeks of volatility.”
This accumulation will help Bitcoin react quickly when CPI weakens the dollar and lower US Treasury yields, and could also provide support if rising oil prices start to challenge the inflation outlook again.
Lacie Zhang, research analyst at Bitget Wallet, said: crypto slate The CPI report said that Bitcoin provided the liquidity-driven catalyst it needed to rise, noting that new disruptions around the Strait of Hormuz made Bitcoin’s rally more likely to reverse.
She placed near-term support at $62,000-$63,000 and resistance at $65,000-$66,000, and a sustained breakout above those zones would send Bitcoin above the range that kept it contained throughout much of June and July.
Such a move could require easing oil tensions, more ETF inflows, or a softer policy signal from the Fed, which could give buyers the confidence they need to absorb profit-taking near $65,000.
If attacks resume around the Strait of Hormuz, oil risk premiums will continue to rise. Rising fuel costs could push up inflation expectations and restore bets on further rate hikes, weighing on Bitcoin before it establishes support above its resistance zone.
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