Finst

Bitcoin, XRP, and Ether Slide Ahead of U.S. Inflation Data

Traders are now pricing in nearly a 50% chance of a Fed hike in July. The CPI data and Warsh's testimony could further shape the rate path and crypto prices.

By Finst News
• 2 min read
Bitcoin, XRP, and Ether Slide Ahead of U.S. Inflation Data

Key Takeaways

  • Bitcoin, Ether, and XRP are under pressure as traders factor in a possible rate hike by the Federal Reserve in July.
  • Bitcoin fell more than 2% in 24 hours to $62,380, while the market is now pricing in about a 50% chance of a rate hike this month.
  • Investors are waiting on U.S. inflation data and Fed Chair Kevin Warsh's testimony, which could further influence the rate path.

Bitcoin, Ether, and XRP are trading lower as markets increasingly lean toward a Federal Reserve rate hike in July. Crypto prices are being pulled around by a mix of firmer rate expectations, fresh U.S. inflation data due later this week, and Fed Chair Kevin Warsh's upcoming testimony in Congress.

Rate Expectations Are Shifting

Bitcoin dropped more than 2% over the past 24 hours to $62,380 (€54,600). Ether, XRP, and other tokens are posting similar declines, according to CoinDesk data. In the money market, traders are now assigning roughly a 50% chance to a rate hike this month, up from about 10% just a few days ago.

That sharp reset in expectations came after comments from Fed Governor Christopher Waller, who said policymakers may need to raise rates again to keep inflation in check. Bond markets moved with the shift as well, with the yield on the U.S. 2-year Treasury climbing to 4,29%, its highest level since early last year.

Inflation and Oil Are Still Driving the Market

The change in the rate outlook is also tied to rising tensions between the U.S. and Iran, along with a steep move higher in oil prices. West Texas Intermediate has risen to nearly $80 (€70) per barrel this month, up from $67 (€59) at the start of the month. That is adding to concerns that inflation could stay sticky, especially if higher energy costs continue to feed into broader price pressures.

For crypto traders, the key issue is that higher rates and rising bond yields can tighten financial conditions. That tends to weigh on risk appetite across the crypto market, particularly when macro data and central bank messaging are driving sentiment.

The combination of higher oil prices and geopolitical tension had already weighed on Bitcoin Falls After Trump's Hormuz Plan as Oil Rises, when the market once again showed a risk-off reaction.

Focus on CPI and Warsh

Tuesday brings another check on those rate expectations with the June U.S. CPI release at 8.30 a.m. ET. Economists surveyed by Bloomberg expect headline inflation to come in below 4% year over year. Based on those forecasts, core inflation is also expected to ease from the previous reading for the first time since January.

After that, the market will turn to Warsh's testimony on Capitol Hill. Investors will be looking for any clues on inflation and the rate path, since the Fed chair typically offers limited forward guidance in public remarks. For European crypto followers, the stakes are still high because U.S. rate expectations often feed quickly into broader demand for risk assets, including crypto.

Disclaimer: This content is for informational purposes only and does not constitute financial, investment, legal, or tax advice. The information provided may be incomplete, inaccurate, or outdated and should not be relied upon as such. Nothing on this website should be considered a recommendation to buy, sell, or hold any cryptocurrency. Investing in crypto-assets involves risk of loss.