Bitcoin and Ethereum moved higher after June inflation came in well below expectations, while interest-rate futures sharply reduced the probability of a Federal Reserve hike at the July 29 meeting.
The initial move pushed Bitcoin to above $63,500 and Ethereum to $1,820, with both assets reached technical resistance. The next test is whether softer inflation produces a durable policy repricing before Federal Reserve Chair Kevin Warsh’s congressional testimony.
Key Takeaways
- Headline CPI fell 0.4% in June and annual inflation slowed to 3.5%, while core CPI was unchanged and eased to 2.6% year over year.
- CME FedWatch raised the probability of no change on July 29 to 83.4%, from 58.3% one day earlier, while the implied chance of a hike fell to 16.6%.
- Bitcoin is testing resistance near $63,600, followed by a stronger barrier around $64,500 where horizontal resistance meets the 50-day SMA.
- Ethereum moved above $1,820 intraday, but confirmation is needed to expose the 0.382 Fibonacci level near $1,872.
Core Inflation Changes the July Debate
The Bureau of Labor Statistics reported that headline CPI declined 0.4% month over month in June after rising 0.5% in May. Economists had expected a smaller 0.1% decrease. The annual rate slowed from 4.2% to 3.5%, below the 3.8% consensus estimate.
Energy drove much of the reversal. The energy index fell 5.7% during the month, including a 9.7% decline in gasoline, after energy costs had increased sharply during the previous three months.
The core data gave the report greater policy weight. CPI excluding food and energy was unchanged, compared with forecasts for a 0.2% increase and May’s 0.2% gain. Annual core inflation eased from 2.9% to 2.6%. Shelter increased only 0.1%, its smallest monthly rise since January 2021.
The combination weakens the case for an immediate rate increase because both headline and underlying inflation slowed. It does not create a clear case for a cut. Inflation remains above the Federal Reserve’s 2% longer-run objective, and one softer month cannot establish that the improvement will persist.
FedWatch Removes Most of the Immediate Hike Risk
The first measurable policy response appeared in federal-funds futures. CME FedWatch data captured at 7:35 a.m. Central Time, six minutes after the release, assigned an 83.4% probability that the Fed would keep its target range at 3.50%–3.75% on July 29.
The probability of a 25-basis-point hike to 3.75%–4.00% fell to 16.6%, while the chance of a cut remained at 0%.
One day earlier, the market had priced only a 58.3% probability of no change and a 41.7% chance of a hike. The CPI report therefore moved the hold probability higher by 25.1 percentage points and reduced the hike probability by the same amount.
That repricing explains the immediate crypto response. Lower expected policy rates reduce the relative appeal of cash and short-term government debt while easing pressure on assets that do not generate conventional income. The market is pricing patience, not monetary easing.
Bitcoin Tests a Two-Layer Resistance Zone
The crypto market moved broadly higher within the first hour. A CoinMarketCap market snapshot showed:
- Stellar: up 1.75% to $0.183
- Ethereum: up 1.54% to $1,824
- Zcash: up 1.38% to $515
- XRP: up 1.23% to $1.08
- Hyperliquid: up 1.20% to $64
- Bitcoin: up 1.11% to $63,500
On the daily chart, Bitcoin remains inside an ascending channel and continues to form higher highs and higher lows. Price is testing the 0.236 Fibonacci retracement near $63,600, followed by a stronger resistance area around $64,500, where a horizontal level converges with the 50-day simple moving average.
Breaking through the full $63,600–$64,500 resistance cluster and holding it on a retest would strengthen the short-term recovery. Failure to clear the area would leave the ascending channel intact, with its lower trendline serving as the first dynamic support.
The monthly chart presents a wider test. Bitcoin continues to hold above a key horizontal support area and the 50-month SMA, preserving its long-term bullish foundation, but the price remains below the former ascending channel.
Resistance near $70,000 aligns with the 0.618 Fibonacci retracement and the previous lower boundary of that long-term channel. Reclaiming the level and defending it as support could signal a return to the broader uptrend, while another rejection could renew selling pressure and keep Bitcoin beneath its former channel structure.
Ethereum Breaks Above $1,820 Resistance
Ethereum had been consolidating above a support zone formed by the 0.236 Fibonacci retracement and the 50-day simple moving average, where buyers repeatedly prevented a deeper decline.
The softer-than-expected U.S. CPI report improved risk sentiment and pushed ETH above resistance near $1,820. Holding the breakout through the daily close and defending the level on a retest could open the way toward the 0.382 Fibonacci retracement near $1,872.
A return below $1,820 probably will weaken the move and bring the 50-day SMA and 0.236 retracement back into focus as the primary support zone.
What Could Reverse the Crypto Reaction
The main risk is that investors treat one softer CPI report as confirmation of a lasting policy shift. Tomorrow’s producer price index could challenge that interpretation if pipeline inflation remains firm, while a further escalation between the United States and Iran, or a renewed multiday closure of the Strait of Hormuz, could push oil higher and feed into future inflation readings. The Federal Reserve may also retain a hawkish stance if officials consider June’s improvement temporary and remain concerned about energy costs or broader price pressures.
Crypto markets face a separate policy catalyst from the Clarity Act. A Senate vote could strengthen sentiment by reducing regulatory uncertainty, while a postponement or failure to advance the legislation before the August recess could disappoint investors expecting near-term progress. Rising Treasury yields, renewed rate-hike expectations, or rejection at Bitcoin’s and Ethereum’s resistance levels would indicate that the initial rally was a short-term reaction rather than the beginning of a sustained move.
Warsh’s Testimony Is the Next Repricing Risk
Investors are waiting for Warsh’s semiannual testimony before the House Financial Services Committee at 10:00 a.m. Eastern Time. His interpretation could determine whether the futures-market adjustment survives the session.
Treating June as evidence that underlying inflation is cooling would support the higher probability of a July hold and give Bitcoin and Ethereum more room to challenge resistance. Emphasizing that headline inflation remains at 3.5%, or warning that one report is insufficient, could restore part of the hike premium.
The CPI release removed much of the immediate tightening risk; it did not settle the direction of policy. For crypto, confirmation now requires both a stable policy repricing and closes above the resistance levels.
The information provided in this article is for educational purposes only and does not constitute financial, investment, or trading advice.
Kosta has reported on cryptocurrency markets and blockchain infrastructure since 2020, bringing over six years of hands-on experience in the crypto industry built through daily tracking of markets, trends, and emerging blockchain developments. Specializing in Bitcoin on-chain analysis, institutional ETF flows, and digital asset price action, his work at Coindoo has been cited by other news agencies and consistently covers market developments with a focus on data-driven reporting across Bitcoin, Ethereum, Solana, and XRP.
Over the years, Kosta has contributed to multiple crypto media outlets in different regions, authoring over 6,000 articles across the sector. His reporting spans cryptocurrency markets and the broader fintech industry, tracking not only price action but also the technological and regulatory forces shaping the ecosystem.
To support his analysis, Kosta actively leverages on-chain data and metrics from leading platforms such as Santiment, Glassnode, and CryptoQuant, enabling deeper, evidence-based market insights. He believes in the power of transparency and the data that underpins the blockchain ecosystem.
His academic background in Marketing Management from Denmark further complements his analytical approach, adding a strong understanding of communication strategy and content positioning to his work.
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