When inflation data in the United States were lower than market expectations in June, risk assets generally rebounded, and bitcoin rebounded in a previous trading day, approaching $65,000. Previously, the situation in the United States in relation to Iran had re-emerged, slowing market sentiment and breaking Bitcoin by $62,000.
CPI is below expectations
According to data published by the United States Bureau of Labor Statistics, in June, the CPI increased by 3.5 per cent compared to the market level of 3.8 per cent; the ring ratio decreased by 0.4 per cent and was weaker than the previous forecast of 0.1 per cent. The core CPI was also below expectations, at 2.6 per cent for the same year, and the market was originally expected to be 2.8 per cent; the ring ratio was at the same level, with an expected increase of 0.2 per cent.
After the publication of inflation data, the market quickly adjusted the judgement of the Federal Reserve policy path. Bitcoin rose by nearly 5 per cent on the 14th of July, touching $64830 at one time and then falling around $64560.
July interest rate bets fall back.
CME Fedwatch data show that traders currently expect the Fed to increase interest rates by only 16.6 per cent at the July conference. Pollymarket also shows that the July interest rate increase probability has dropped to 9 per cent, which was once as high as 34 per cent.
Polymarket also shows that the market's expectation of at least one increase in interest in 2026 is also falling, with the probability of associated increases falling from the previous high of 71 per cent to 53 per cent. This means that weaker-than-anticipated inflation data temporarily alleviate market concerns about short-term policy tightening and support high-variant assets such as bitcoin.
Market shift to PPI
Shortly before inflation data were published, Federal Reserve Officer Christopher Waller had indicated that he might support further increases in interest rates if inflation remained high. Now, with the CPI coming down, the focus of the market is on the next policy statement and more inflation data.
Investors are now concerned about the upcoming two days of testimony to Congress by Federal Reserve Chairman Kevin Warsh and the forthcoming release of PPI data. All these factors have the potential to re-integrate interest rate expectations and bring about new volatility in the encrypted market.
At the same time, the situation in the Middle East continues to be an important factor in limiting the continued expansion of markets. The recent escalation of the United States-Iran-related conflict and the decision by Trump to resume the blockade on Iran were cited as putting pressure on the global market.
In addition, Trump proposed that a 20 per cent freight charge be levied on ships passing through the Strait of Hormuz and receiving United States assistance. The market is concerned that, once this route is disrupted, the global supply of crude oil may tighten and push back inflationary pressures in the coming months.