Bitcoin drops 2% as Fed rate hike odds surge to 50% before CPI
In brief
- Bitcoin fell 2% to $62,380; Ether, XRP, and major tokens suffered similar losses
- Money markets assign 50% odds to July Fed rate hike, up from 10% days prior
- Fed Governor Christopher Waller signaled officials may raise rates to control inflation
- June CPI report releases Tuesday; economists forecast headline inflation below 4% annually
Crypto Selloff Follows Rate Hike Repricing
Ether, XRP, and other tokens are nursing similar losses, according to CoinDesk data. The broad decline underscores crypto's sensitivity to shifts in monetary policy expectations. When rate hike odds rise, investors tend to reduce exposure to risk assets like digital currencies.
The two-year U.S. Treasury yield climbed to 4.29%, its highest level since early last year, signaling tighter financial conditions ahead. Fed Governor Christopher Waller remarked that officials may need to raise rates to bring price pressures under control, a comment that accelerated the repricing of Fed futures.
Oil Surge and Inflation Watch
Geopolitical risk has also weighed on sentiment. President Donald Trump reinstated a U.S. blockade of Iranian vessels transiting the Strait of Hormuz and demanded a 20% reimbursement fee on other cargo. The move sent energy prices higher. West Texas Intermediate crude futures surged to nearly $80 a barrel from $67 at the start of the month, stoking fresh inflation concerns.
All eyes now turn to the June consumer price index. The Labor Department releases the report Tuesday at 8:30 a.m. ET. Economists surveyed by Bloomberg forecast headline CPI will fall below a 4% annual rate, down from May's readings of 4.2% headline and 2.9% core inflation. A cooler print could ease rate hike bets; a hotter one would likely cement them.
Trading Activity Picks Up
Crypto markets themselves showed signs of life in June. CEX spot trading volumes climbed 15.3% to $1.11 trillion, marking the first increase in five months. RWA perpetual volumes surged to a record $311 billion, suggesting growing interest in real-world asset derivatives. Yet the broader macro headwinds—higher rates, geopolitical risk, and sticky inflation—continue to weigh on sentiment.
