Bitcoin climbed above $65,500 on Wednesday after new U.S. inflation data showed producer prices fell in June, according to a report from Bitcoin Magazine.
The report cited Labor Department data showing the Producer Price Index posted its largest decline in 14 months. According to Bureau of Labor Statistics figures, the PPI excluding food and energy fell 0.3% in June.
Bitcoin was recently trading at $64,943, up 2% over the past 24 hours. The article said the asset has often rallied when inflation appears to cool, as investors then increase expectations for lower interest rates. Crypto, stocks, and other risk-on assets have historically performed well in a lower-rate setting.
Geopolitical tension remains part of the picture
The article also said softer inflation data does not account for the latest escalation in the U.S.-Iran war. It said President Donald Trump stated this week that the U.S. would take control of the Strait of Hormuz. On Wednesday, he said bombing would intensify until Tehran stops attacking ships in the strait and agrees to reopen the waterway.
Trump told Fox News on Tuesday, “We’re going to hit [Iran] very hard the night after.” He added, “And then next week it gets really bad for them because next week comes the power plants.” He also said, “The only way you can negotiate with these people is through strength.”
Bitcoin Magazine said Bitcoin has seen heavier volatility since the U.S. and Israel attacked Iran on February 28, with the cryptocurrency dropping sharply when the war was first reported.
Year-to-date losses and ETF outflows
Since the start of the year, Bitcoin has lost nearly 30% of its value, the report said. It is now close to 50% below the record high of $126,080 reached in October.
The article added that downward pressure has also come from June outflows in spot exchange-traded funds, as U.S. investors rapidly pulled cash from those products. It said uncertainty around inflation and a surge in artificial intelligence-related stocks pushed speculators to move capital elsewhere.
JUST IN: Bitcoin rips to $65,374
CPI data and focus on Kevin Warsh
The report said June Consumer Price Index figures released Tuesday also suggested inflation was easing in the United States, which also helped lift Bitcoin. Over the last seven days, Bitcoin traded between $61,507 and $65,501.
Traders are now watching new Federal Reserve Chair Kevin Warsh. The article described him as someone who has typically been viewed as an inflation hawk. This week, Warsh told Congress that the Federal Reserve has “no tolerance for persistently elevated inflation,” and that policymakers share “a resolute commitment to restoring price stability.”
Warsh was sworn in as the new central bank chief in May. The former Federal Reserve governor has said he wants to lower borrowing costs, though markets initially priced him as a hawk, meaning someone expected to raise interest rates to fight inflation.
At the time of writing, Bitcoin was trading near $65,000.
The article was first published by Bitcoin Magazine and written by Mathew Di Salvo.