US CPI Rises 4.2%, Analysts Say Bitcoin May Face Further Losses
Summary
- US May CPI rose 4.2%% from a year earlier, adding to pressure on Bitcoin (BTC) and increasing the risk of further declines.
- Analysts said risk assets are under pressure as rate-cut expectations weaken and the likelihood of liquidity expansion fades.
- Some cited the possibility of Bitcoin falling below $60,000, though they said the chance of a rate hike this year remains low.
Forecast Trend Report by Period
Persistently high US consumer inflation may add to downward pressure on Bitcoin, analysts told Cointelegraph.
US consumer prices rose 4.2% in May from a year earlier, Cointelegraph reported on June 11. The reading weakened expectations for Federal Reserve rate cuts, and some market participants have begun discussing the possibility of another rate increase this year.
Iggy Ioppe, chief investment officer at Theo, said the latest CPI data would keep the Fed cautious. He said the reading was unlikely to provide a clear bullish catalyst for Bitcoin.
With rate-cut expectations limited, the chances of broader liquidity expansion have also diminished, he said. Risk assets are being driven more by investor positioning than by expectations for easier monetary policy.
Markus Thielen, founder of 10x Research, also expects institutional inflows to remain limited for now. He said the inflation data were not strong enough to prompt Wall Street investors to raise their Bitcoin allocations, adding that more evidence is needed to show inflation is steadily cooling.
Thielen also said geopolitical tensions involving Iran and rising international oil prices could rekindle inflation pressure. Bitcoin remains vulnerable, he said, and the odds are rising that it could fall below $60,000 in the next few days.
Still, Tim Sun, chief researcher at HashKey Group, said market speculation about another rate hike is overdone. He said the Fed is unlikely to raise rates this year, adding that appetite for risk assets will recover in earnest only if inflation slows and rate cuts become possible.
Meanwhile, the CME FedWatch Tool showed a 98.4% probability that the Federal Open Market Committee will keep rates unchanged at its June 17 meeting.
