After the release of fresh US Consumer Price Index (CPI) data, Bitcoin not only surpassed the $65,000 mark but also managed to hold onto its gains. The leading cryptocurrency is trading near $65,340, showing a confident 2% increase over the past 24 hours. This momentum was bolstered by renewed capital inflows into cryptocurrency exchange-traded funds (ETFs), signaling a return of institutional interest.
The key catalyst was the slowdown in US annual inflation from 4.2% to 3.5%, against a forecast of 3.8%. Core CPI, which excludes volatile food and energy prices, also declined from 2.9% to 2.6%. On a monthly basis, consumer prices fell by 0.4%, marking the most significant drop since April 2020. This was largely driven by cheaper energy prices.
The market reaction was immediate: Bitcoin's price surged from $62,000 to $64,900 within minutes of the data release. Ethereum also recovered ground, rising over 4% to $1,933. According to my data, in the first hour after the CPI release, trading volume on Binance reached $1.2 billion, while on OKX and Deribit it hit $23.6 million and $15 million, respectively. This indicates a strong speculative impulse, though it has yet to form a sustained upward trend.
Interestingly, new Fed Chair Kevin Warsh, in his testimony before the House committee, noted the impact of artificial intelligence as a disinflationary factor but emphasized that the regulator is not ready to declare victory over inflation. The probability of a key rate hike at the July 28-29 meeting dropped sharply from 42% to 12.3%, which clearly benefited risk assets.
Capital inflows into spot Bitcoin ETFs on July 14 totaled $181 million, with $139 million of that going to BlackRock's IBIT fund. This marks a sharp reversal after $425 million in outflows the previous day. Ethereum funds attracted $58.34 million, with the entire amount coming exclusively from BlackRock's ETF. However, it's worth noting that since the start of July, periods of inflows and outflows have alternated every few days, indicating a lack of clear direction among institutional players.
My analysis: Despite the market's positive reaction to the macroeconomic data, the current movement is predominantly speculative. For a sustained bullish trend to form, additional signals from the Fed regarding monetary policy easing are needed. For now, traders should prepare for high volatility, especially given that the market is still "licking its wounds" after the recent drop to $61,700 amid geopolitical risks.