Bitcoin hits $64,800 as soft CPI erases Fed hike odds
Bitcoin and broader risk assets rallied after weaker-than-expected U.S. inflation collapsed the odds of a near-term Federal Reserve rate hike, though analysts warn the cryptocurrency remains far from a structural breakout.
Bitcoin climbed 3.6 percent to $64,800 on Wednesday, marking its strongest session in weeks, after U.S. inflation cooled more than anticipated. The shift in data immediately crushed market expectations for a near-term Federal Reserve rate hike, triggering a broad rotation back into risk assets.
June headline inflation fell to 3.5 percent from 4.2 percent, while the core measure eased to 2.6 percent from 2.9 percent. Because the core pullback excludes volatile food and energy costs, it effectively removed the strongest argument for the central bank to tighten policy further. Implied probability of a rate increase subsequently plummeted from 43 percent to 13 percent, and the two-year Treasury yield dropped six basis points.
The rate adjustment directly benefits bitcoin because higher yields on cash and Treasuries otherwise draw capital away from yield-free, volatile digital assets. With the immediate threat of tighter policy receding, roughly $31 billion changed hands in bitcoin over 24 hours. Ether outperformed the largest token, gaining 5.3 percent to $1,880, while Solana, XRP, BNB, and Dogecoin all posted gains between 1.9 percent and 3.7 percent.
The crypto rally mirrored a wider equity surge. MSCI's Asia Pacific index climbed 2.3 percent, led by an 8.2 percent jump in South Korea's Kospi. SK Hynix rose 13 percent in Seoul following a 27 percent surge in its U.S. depositary receipts. Oil prices moved independently of the risk-on shift, with Brent crude advancing 1 percent to over $85 a barrel—an 11 percent surge over two sessions—driven by geopolitical tensions after U.S. actions in the Strait of Hormuz.
Rate sensitivity limits upside
Despite the sharp bounce, market professionals caution against reading the move as a fundamental shift for digital assets. "Bitcoin remains a rate-sensitive risk asset rather than a macro hedge," said Jeff Ko, chief analyst at CoinEx. Ko noted that the inflation data reduces "immediate downside pressure without building a durable breakout."
Core inflation remains above the Fed’s 2 percent target, giving the central bank room to hold rates steady rather than cut them. Investors are now looking toward the September FOMC meeting as the next major macro test. The sustainability of the current price level will likely depend on the trajectory of the U.S. dollar and whether bitcoin ETFs can continue attracting capital.
There are early signs of renewed engagement in the digital asset sector. CEX spot trading volumes rose 15.3 percent to $1.11 trillion in June, halting a five-month streak of declines. Additionally, perpetual volumes for real-world assets surged to a record $311 billion during the month.
