The July U.S. inflation report was a breath of fresh air for financial markets. The Consumer Price Index (CPI) data came in significantly softer than the consensus forecast, instantly triggering a rally in risk assets, including cryptocurrencies.
The annual CPI slowed to 3.5%, while analysts had expected 3.8%. Even more impressive was the decline in the core index (Core CPI), which excludes volatile food and energy prices: it came in at 2.6% against a forecast of 2.8–2.9%. On a monthly basis, the headline CPI even turned negative by 0.4%.
This is the first time in 2026 that data has so unequivocally pointed to a resumption of the disinflationary trend. A key role was played by cheaper energy prices, but core inflation also showed zero month-over-month growth — a signal that price pressures are easing systematically.
Market Reaction: Bitcoin on the Rise
The cryptocurrency market reacted immediately. Bitcoin, which was hovering around $62,000 ahead of the release, confidently broke through the $63,000 mark and came close to $64,000. The rise was accompanied by a decline in yields on 10-year U.S. Treasury bonds, a classic signal of increased risk appetite.
The logic is simple: lower inflation reduces the likelihood of aggressive monetary policy tightening. This supports liquidity and pushes investors to seek returns beyond traditional safe-haven assets.
Fed Rhetoric: Warsh Stays the Course
However, it is not all clear-cut. On the same day, Federal Reserve Chairman Kevin Warsh delivered his traditionally hawkish speech before Congress. He confirmed that the Fed "has no intention of tolerating prolonged high inflation" and emphasized that core inflation is the determining factor for monetary policy.
Currently, the target range for the key interest rate remains at 3.50–3.75%. Warsh also noted the stability of the labor market, which alleviates concerns about forced policy easing due to an economic downturn.
Analyst's Perspective
In my view, today's data is precisely the catalyst the crypto market was waiting for. The trend of declining inflation is now statistically confirmed, and if the next batch of data (including the FOMC meeting at the end of July) does not bring any surprises, we could see a steady inflow of capital into digital assets in the second half of the year. Investors should closely monitor the dynamics of core CPI — it remains the main benchmark for the Fed.