Key Takeaways
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Bitcoin rose after the latest US inflation report, with traders focusing on softer underlying inflation despite headline CPI remaining elevated.
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US headline inflation came in at 4.2% year-over-year, matching forecasts and remaining well above the Federal Reserve’s 2% target.
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The European Central Bank raised interest rates by 25 basis points, marking its first rate hike since September 2023.
Bitcoin edged higher on Thursday as investors welcomed signs of easing underlying US inflation, while largely shrugging off the European Central Bank‘s first interest rate hike in nearly three years.
The world’s largest cryptocurrency climbed toward the $63,000 mark after fresh inflation data showed that core consumer prices rose less than expected in May.
This reinforces hopes that central banks may avoid further aggressive monetary tightening despite persistent geopolitical and energy-related risks.
The move comes as Bitcoin continues to hover above the psychologically important $60,000 level, a key support zone that traders have closely monitored amid heightened macroeconomic uncertainty.
Softer Core Inflation Eases Pressure on Risk Assets
According to data from the US Bureau of Labor Statistics, headline consumer inflation rose 0.5% month-over-month in May, matching economists’ forecasts. Annual inflation remained at 4.2%, still more than double the Federal Reserve’s long-term target of 2%.
However, markets focused on a more encouraging development beneath the headline figure. Core inflation, which excludes volatile food and energy prices, rose just 0.2% in the month, below expectations of a 0.3% rise.
The softer core reading suggested that underlying price pressures are not accelerating despite ongoing geopolitical tensions and elevated energy costs linked to conflict in the Middle East.
For investors, this distinction matters.
While headline inflation remains stubbornly high, slower growth in core prices reduces the likelihood of additional aggressive Federal Reserve tightening and supports the case that inflation may gradually move lower over time.
Bitcoin reacted positively to the data, with traders viewing the report as a sign that monetary conditions may not become significantly more restrictive in the coming months.
The cryptocurrency has often benefited from improving liquidity expectations, particularly when inflation indicators suggest central banks can afford greater policy flexibility.
ECB Delivers First Rate Hike Since 2023
Adding to the macroeconomic backdrop, the European Central Bank announced a widely anticipated 25-basis-point interest rate increase, its first rate hike since September 2023.
