Bitcoin Trader Warns of ‘Lower High’ as $64,000 Returns on US CPI Drop

Bitcoin (BTC) spiked past $64,000 into Tuesday’s Wall Street open as US inflation saw a surprise sudden downturn.

Key points:

Bitcoin returns to near the top of its local trading range on US inflation data.The biggest drop in CPI since April 2020 boosts crypto and risk assets.Traders remain in wait-and-see mode over whether local resistance will break.

US CPI ignores Iran pressure with snap drop

Data from TradingView showed BTC/USD gaining more than 2% on the day as the June print of the Consumer Price Index (CPI) came in below expectations.

BTC/USD one-hour chart. Source: Cointelegraph/TradingView

At 3.5% versus the anticipated 3.8%, CPI posted its largest monthly decline since April 2020, per data from US Bureau of Labor Statistics (BLS). Energy led the drop despite headwinds from the US-Iran war and the closure of the Strait of Hormuz oil route.

“The index for energy fell 5.7 percent in June after rising 3.9 percent in May, 3.8 percent in April, and 10.9 percent in March,” an official news release stated.

“The energy index was the largest contributor to the monthly all items decrease, more than offsetting increases in other indexes including those for shelter and food.”

US CPI 12-month % change. Source: BLS

Risk assets reacted positively, with US stocks in the green and crypto showing particular relief.

Market expectations of future Federal Reserve financial policy changes also turned dovish, with the odds of interest-rate hikes dropping sharply. The latest data from CME Group’s FedWatch Tool nonetheless maintained consensus for a 0.25% hike at the Fed’s September meeting.

Fed target rate probabilities (screenshot). Source: CME Group

“This print should help temper what had become an excessively hawkish market tilt to the monetary policy outlook,” economist Mohamed El-Erian wrote in a response on X.