Bitcoin slips as traders lift July Fed rate hike bets ahead of Inflation report — SkimNews
SkimNews Take
BTC's drop traces a single chain: Hormuz blockade → oil spike → inflation expectations → Fed hawkishness → risk-off. Crypto is now tethered to supply-side geopolitical shocks, which undermines its inflation-hedge claim precisely when that claim should be strongest.
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- Bitcoin and other major cryptocurrencies dropped 2%+ in 24 hours as money markets raised July Fed rate hike odds to roughly 50%, up from ~10% days ago per Bloomberg data
- Two-year U.S. Treasury yield jumped to 4.29%, its highest level since early last year, reflecting the hawkish repricing
- President Trump reinstated a U.S. blockade of Iranian vessels in the Strait of Hormuz and demanded a 20% reimbursement fee on all other cargo transiting the waterway
- WTI crude surged to nearly $80/barrel from $67 at the start of the month, stoking fresh inflation concerns among investors
- Economists surveyed by Bloomberg forecast June CPI falling below a 4% annual rate — the first declines in headline and core inflation since January (May: 4.2% and 2.9%, respectively)
- Fed Chair Kevin Warsh faces congressional testimony after Tuesday's CPI report; ING analysts suggested he could emphasize 'tameness of inflation expectations' and that any hike would likely be reversed with bigger cuts to follow
- Fed Governor Christopher Waller said officials may need to raise rates to bring price pressures under control, prompting the rate-hike repricing
Why it matters: Crypto traders face a near-term binary event in Tuesday's CPI print — the source notes that should inflation prove more persistent, it could amplify concerns about the Fed's path and push the 50% July hike odds even higher, dragging Bitcoin further. ING's curve read suggests any delivered hike would likely be reversed with bigger cuts to follow, meaning short-term pain may set up the next buying opportunity.
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