Bitcoin Tumbles as Hot CPI Data Crushes Fed Rate Cut Hopes

• Bitcoin dropped 4.15% to $118,181 after June CPI data showed 2.7% inflation, higher than the expected 2.6%.

• The total crypto market cap fell to $3.71 trillion as Bitcoin first surged 5% then plummeted 4% within an hour.

• Fed rate cut odds for July collapsed to just 2.6% while chances of keeping rates steady hit 97.4%.

Bitcoin experienced dramatic price swings following the release of June’s Consumer Price Index data, which came in above expectations at 2.7% year-over-year. The cryptocurrency market faced immediate volatility as investors digested the inflationary implications.

The U.S. Bureau of Labor Statistics reported CPI at 2.7%, surpassing the anticipated 2.6% reading. This marks the highest inflation level since February 2025 and represents a significant jump from May’s 2.4% figure.

Bitcoin’s price action reflected the market’s uncertainty. The leading cryptocurrency initially surged 5% within minutes of the data release before plummeting nearly 4% in under an hour. At press time, Bitcoin trades at $118,181, down 4.15% from its recent all-time high of $123,091.

Cryptocurrency Market Cap Drops to $3.71 Trillion

The broader cryptocurrency market felt the impact of the economic data release. Total market capitalization fell to $3.71 trillion as digital assets across the board experienced selling pressure.

Bitcoin’s volatility followed a record-breaking week where the cryptocurrency established new all-time highs. The sharp reversal demonstrates how sensitive crypto markets remain to macroeconomic developments.

Market analyst Kyledoops noted the data’s impact: “US June CPI just came in at 2.7% year-over-year – a touch hotter than the 2.6% estimate. Not a massive miss, but enough to keep the Fed guessing and the market on edge.”

The Kobeissi Letter had previously warned investors about potential selloffs if inflation data exceeded expectations, citing concerns about Trump tariffs contributing to price pressures.

Fed Rate Cut Odds Collapse Ahead of July Meeting

The hotter-than-expected inflation reading dramatically altered Federal Reserve policy expectations. Odds of a July rate cut to 400-425 basis points plummeted to just 2.6%, while probabilities of maintaining current rates soared to 97.4%.

This shift in Fed expectations comes just 15 days before the next Federal Open Market Committee meeting. Strong employment data combined with rising inflation concerns from proposed Trump tariffs have effectively eliminated hopes for July monetary easing.

Traditional markets showed resilience despite the inflation concerns. The S&P 500 breached the 6,300 mark for the first time in history, maintaining its 30% gain over the past three months.

The cryptocurrency sector now faces increased scrutiny as investors weigh the implications of persistent inflation on digital asset valuations. Bitcoin’s reaction to the CPI data underscores the ongoing correlation between crypto markets and traditional economic indicators.