Bitcoin jumped back above $62,000 on Wednesday after the US consumer price index for May came in at 4.2% year-over-year, matching expectations and notching the fastest pace in three years. The rebound lifted the largest cryptocurrency off the $60,000 support level it had defended in recent days, after a brutal month that saw it drop $21,000 from highs.
Inflation hits a three-year high
The headline CPI number is more than double the Federal Reserve's 2% target. Core inflation, which strips out food and energy, ticked up to 2.9% from April's 2.8%. That's not a huge acceleration, but it's not the direction the Fed wants to see. Markets had been bracing for the report all week, and the actual figures came in right on consensus — which may have been enough to trigger relief buying in risk assets.
Crypto market's $10 billion shakeout
Before the CPI release, the crypto market had already gone through the wringer. Over $10 billion in bullish long positions were liquidated across exchanges, part of the broader selloff that dragged Bitcoin from its May highs. That kind of forced deleveraging tends to wash out the weakest hands. When the CPI didn't surprise to the upside, the buying pressure came back fast.
Bitcoin's next test at $64,000
The bounce from $60,000 was sharp, but Bitcoin hasn't cleared the next real hurdle. Resistance sits at $64,000, a level that acted as support earlier this spring. If it breaks through that, traders will look for the old highs. If it stalls, the rally could fizzle. The timing isn't great for the Fed either — inflation's still running hot, and this data gives them little reason to ease off rate hikes soon. For now, Bitcoin's got a foothold above $62k. What happens next depends on whether the next leg up gets volume behind it.
