Bitcoin rose to $65,500 on Wednesday, its highest price since June 22, after the release of US Producer Price Index (PPI) data that came in below expectations. The move marks the second time this week that a key inflation gauge has surprised to the downside, fueling bets that the Federal Reserve may ease monetary policy sooner than anticipated.
PPI data fuels rate-cut hopes
The Bureau of Labor Statistics reported that the producer price index rose 0.1% month-over-month in June, below the 0.2% consensus estimate. Core PPI, which excludes food and energy, was flat. The data follows Tuesday's consumer price index (CPI) print, which also missed forecasts. Together, the two reports paint a picture of cooling inflation across the economy.
For crypto markets, lower inflation readings are a double-edged sword. On one hand, they reduce the urgency for the Fed to keep rates high, which tends to boost risk assets like Bitcoin. On the other, a sharp slowdown could signal economic weakness. So far, the market is leaning into the optimistic interpretation.
Bitcoin breaks out of its range
Bitcoin had been stuck in a tight range between $60,000 and $63,000 since late June, with traders waiting for a catalyst. The PPI miss provided that spark. The move above $65,000 was accompanied by a surge in spot volumes on major exchanges, though the rally stalled just shy of the $66,000 level.
The timing is notable. Bitcoin's previous high from June 22 came after a similar macro surprise. The pattern suggests the market is increasingly sensitive to inflation data, with each miss triggering a sharp but short-lived rally.
The macro picture ahead
With two consecutive inflation misses, the narrative has shifted. Traders are now pricing in a higher probability of a rate cut at the Fed's next meeting. The CME FedWatch tool shows odds of a quarter-point cut in September have risen above 70%.
Whether Bitcoin can hold above $65,000 will likely depend on the next round of economic data. Retail sales and industrial production figures are due next week. For now, the market is watching for any further macro surprises that could extend the rally — or reverse it.
