Bitcoin Nears $65,000 as Cooling Inflation Dampens Fed Hike Odds

According to the U.S. Bureau of Labor Statistics, the consumer price index slowed to 3.5% year-over-year in June, notably lower than the 3.8% forecast by economists. Core inflation, which excludes volatile food and energy costs, also tracked below expectations at 2.6%. This decline provides a reprieve for crypto markets, which had recently retreated below $62,000 amid heightened geopolitical tensions between the United States and Iran.

Market participants have reacted swiftly to the data. CME FedWatch now assigns just a 16.6% probability to a July rate hike, a significant drop from previous weeks. Similarly, on the prediction platform Polymarket, the odds of a July increase plummeted to 9% from a 34% peak. This shift arrived shortly after Fed Governor Chris Waller signaled openness to tighter policy, suggesting that the latest inflation figures have successfully neutralized immediate hawkish pressure.

Despite the positive price action, investors remain cautious regarding external volatility. President Donald Trump’s proposal to impose a 20% cargo fee on vessels receiving U.S. assistance in the Strait of Hormuz has introduced new supply chain concerns. With Federal Reserve Chair Kevin Warsh scheduled to testify before Congress and upcoming producer price index data on the horizon, traders are closely monitoring how these geopolitical friction points might complicate the broader economic outlook.