US Inflation Data Lands Today, and Crypto Traders Are Watching Closely

That's because falling inflation makes it easier for the Federal Reserve to follow through on interest rate cuts later this year, something traders hope will buoy crypto.

US inflation data is set to be closely monitored by crypto traders today.

Falling inflation would make it easier for the Federal Reserve to follow through on interest rate cuts later this year, something traders hope will buoy crypto.

Analysts expect the June Consumer Price Index to come in at 3.1%, down from 3.3% in May. A reading lower than 3.1% is bullish, and could cause fireworks.

Neil Wilson, chief analyst at Markets.com, said in a client email that May’s cooler inflation numbers indicate that the series of hot inflation reports earlier this year “are now firmly behind us.”

In a note to clients, Wintermute highlighted recent comments from Fed Chair Jerome Powell, who said inflation data showed “modest progress.”

More positive data, Powell said, would bolster the committee’s confidence in achieving inflation rates below 2%, a prerequisite for cutting rates.

It’s not just falling inflation that could sway the Fed’s hand. A weaker than expected US employment report released Friday signaled the US central bank to cut interest rates in order to avert a recession.

Markets currently price a 4.5% chance of a July rate cut and an almost 75% chance of one in September, Wintermute said.

After hitting an all-time high of $73,737 in March, Bitcoin has bled much of its yearly gains.

Fears over the German government’s liquidation of more than $900 million worth of seized Bitcoin drove the asset down to $54,092 earlier this week, a 25% drop from its highs.

There are also signs of interest, despite the summer lull.

On Tuesday, BlackRock’s spot Bitcoin ETF saw $121 million in inflows.