U.S. inflation cooled to 3.4% in July, yet Bitcoin barely reacted, ticking up a fraction of a percent while the broader crypto market slipped. Traders had already priced in the softer print through a week of strong ETF inflows, leaving the token stuck in its recent range.
The Consumer Price Index rose 0.1% in July after falling 0.4% in June. That brought the annual rate to 3.4%, a tick below June's 3.5%. Bitcoin barely reacted: the largest cryptocurrency ticked up about 0.3% to roughly $63,750. Total crypto market cap slipped under 1% over the same period.
Why the relief was already priced in
Shelter rose 0.1% in July, accounting for roughly two-thirds of the monthly increase. Energy pulled the other way, as gasoline prices helped drag the category down 1.5%. Core prices, which strip out food and energy, rose 0.2% in July and 2.5% over the year — the gauge the Federal Reserve watches most closely. According to Bitcoin Magazine, that annual core reading marked the slowest pace since March 2021.
Softer inflation typically nudges the Fed toward rate cuts, which makes non-yielding assets such as Bitcoin more attractive. That lift didn't show up this time because markets had priced in the outcome weeks ago. Investors had already moved: spot Bitcoin ETFs pulled in roughly $854 million over five straight sessions, their strongest run since May, as rate-hike bets faded ahead of the print.
Bitcoin stays boxed in
Bitcoin is pinned between roughly $62,000 support and $67,000 resistance, trading under $65,000 since a brutal early-August selloff, with its 50-day average sitting below its 200-day average.
The softer print also takes pressure off Federal Reserve Chairman Kevin Warsh to raise interest rates in September, according to Bitcoin Magazine. On the Myriad prediction market, traders currently see Bitcoin more likely to slide toward $55,000 than to rally to $84,000. They also price just 17% odds Bitcoin touches $70,000 this month.
Bitcoin already got one macro excuse to run last week, when a weak jobs report pointed to a dovish Fed, and it didn't take it. It's little surprise the token did the same on this latest inflation reading.
Sources: Decrypt, Bitcoin Magazine
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