Bitcoin climbed above $62,000 after US core inflation cooled more than expected, while investors largely brushed off the ECB’s first interest rate hike since 2023. | Credit: CCN.com
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Key Takeaways
Bitcoin rose after the latest US inflation report, with traders focusing on softer underlying inflation despite headline CPI remaining elevated.
US headline inflation came in at 4.2% year-over-year, matching forecasts and remaining well above the Federal Reserve’s 2% target.
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.
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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.
The ECB cited inflationary pressures stemming from the ongoing conflict in the Middle East, particularly rising energy costs, as the primary reason for tightening monetary policy.
Following the move, the deposit facility rate increased to 2.25%, while the main refinancing rate rose to 2.40%.
We raised our key interest rates by 0.25 percentage points.
The central bank also revised its inflation outlook, forecasting eurozone inflation to average 3.0% in 2026 before gradually declining toward its 2% target over the coming years.
Despite the policy tightening, market reaction was relatively muted. The euro remained stable against the US dollar, and cryptocurrency markets showed little sign of concern.
Investors appeared more focused on the softer US core inflation figures than on the ECB’s decision, which had already been largely priced into financial markets.
Bitcoin Holds Key Support as Markets Await Fed Signals
While Bitcoin’s immediate reaction was positive, analysts caution that the broader macroeconomic picture remains mixed.
Federal Reserve officials are still expected to maintain a “higher-for-longer” approach to interest rates following stronger-than-expected labor market data released earlier this month.
The latest inflation report may reduce fears of further tightening, but it does not necessarily accelerate the timeline for rate cuts.
Bitcoin rises above $62,000 after US CPI data and ECB rate hike. | Credit: CoinMarketCap
For Bitcoin, maintaining support above $60,000 remains critical. The cryptocurrency is currently trading at approximately $62,700, with a market capitalization exceeding $1.25 trillion.
Investors continue to view the asset as a barometer for global liquidity conditions, making upcoming Federal Reserve communications and economic data releases particularly important.
Giuseppe Ciccomascolo began his career as an investigative journalist in Italy, where he contributed to both local and national newspapers, focusing on various financial sectors.
Upon relocating to London, he worked as an analyst for Fitch's CapitalStructure and later as a Senior Reporter for Alliance News. In 2017, Giuseppe transitioned to covering cryptocurrency-related news, producing documentaries and articles on Bitcoin and other emerging digital currencies. He also played a pivotal role in establishing the academy for a cryptocurrency exchange website. Crypto remained his primary area of interest throughout his tenure as a writer for ThirdFloor.
