Bitcoin’s early rally to $110,000 quickly lost momentum

Bitcoin’s early rally to $110,000 quickly lost momentum as US-China trade talks, despite some signs of progress, failed to impress, and tensions surged

Bitcoin's early rally to $110,000 lost momentum on Wednesday as US-China trade talks failed to impress despite some signs of progress, and tensions surged after Israel told US officials it was ready to launch an operation into Iran.

Bitcoin touched $110,300 after a better-than-expected May CPI print, with headline inflation rising 2.4% year-over-year, slightly below the forecasted 2.5%. The figures offered a brief boost despite worries over tariff-driven inflation pressures.

The largest crypto asset also found support from President Trump announcing progress in US-China trade talks on the day. But analysts say the new deal is still narrow in scope, largely focused on rare earth export controls.

According to Capital Economics’ Mark Williams, major trade barriers remain largely untouched, with tariffs still running at 55% on Chinese goods and 10% on US exports.

"It seems like more of a pause in the trade war rather than a resolution, even though the administration is framing it as a win," Williams added.

The Fed is not expected to lower interest rates at its policy meeting next week. While May’s CPI came in slightly below expectations, inflation rose to 2.4% year-over-year, up from 2.3% in April, and remains above the Fed’s 2% target.

Coupled with stronger-than-expected job growth, this has led market participants to almost entirely rule out the possibility of a rate cut in June, according to CME FedWatch data.

The odds of a rate cut in July also declined following the new inflation data, leaving September, November, and December as the only realistic windows for policy easing this year.

Markets now price in a 74% chance of a rate cut in September, rising to nearly 88% in November and roughly 96% in December.

As the summer progresses, the potential for lower inflation may arise from excess retail inventory and a decline in housing prices, according to Nic Puckrin, co-founder of The Coin Bureau.

"We could be seeing an overall trend of lower inflation in the coming months," Puckrin stated.

With persistently low inflation, Puckrin anticipates that the Fed might be induced to cut rates in the subsequent months.

"I think we might get a rate cut or two out of the Fed yet, which could help to propel Bitcoin upwards."