Markets pull back from highs as CPI comes in hotter than expected originally appeared on TheStreet .
Bitcoin retreated Tuesday as the U.S. Consumer Price Index (CPI) showed hotter-than-expected inflation, denting optimism around a potential Federal Reserve rate cut.
The CPI rose 0.3% month-over-month in June, accelerating from May’s 0.1% pace. Year-over-year inflation also jumped to 2.7%, up from 2.4% in May. Core CPI, which excludes food and energy, rose 0.2% in June and came in at 2.9% annually — signs that underlying inflationary pressure remains sticky.
The data prompted a swift market reaction. At press time, Bitcoin (BTC) was trading at $116,227, down nearly 6% from its recent all-time high of $123,300.
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The sell-off coincides with shifting expectations for a Fed rate cut. According to the CME FedWatch Tool, the probability of a rate cut in September dropped to 60%, down from over 80% last week.
“BTC has undergone short-term liquidation following a series of breakouts,” said analysts at Bitunix, a global digital asset exchange.“Key support to watch: $117,000–$116,300. If this zone holds, a rebound may occur. If support breaks, the next key level lies at $110,500.”
Will Powell be out?
The inflation surprise also brought broader macro concerns back into focus, including the potential ousting of Federal Reserve Chair Jerome Powell by President Donald Trump. Deutsche Bank’s George Saravelos recently flagged this as one of the “most underpriced risks,” warning it could spark a 3% to 4% dollar decline and 40 bps spike in Treasury yields within hours.
While the Fed’s next move remains uncertain, the takeaway for markets is clear: the path to easing may be bumpier than hoped. As one Bitunix strategist put it, “Given rising macro and geopolitical risks, traders are advised to adopt a cautious stance.”
Stock futures were mixed following the data: S&P 500 futures rose 0.3%, Nasdaq 100 futures added 0.6%, while Dow futures slipped 0.2%. Nvidia jumped over 4% premarket after announcing plans to resume H20 AI chip sales to China.
How CPI impacts crypto markets
The Consumer Price Index (CPI) acts as a key inflation gauge and directly shapes how the Federal Reserve sets interest rates. When CPI rises, it signals that inflation is heating up, which typically causes the Fed to either maintain or raise interest rates to cool the economy. Higher rates make traditional, safer assets like bonds more attractive—leading investors to pull back from high-volatility assets like Bitcoin, Ethereum, and altcoins.
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In the current cycle, with CPI up 0.3% for June and annual inflation hitting 2.7%, markets are anticipating the Fed may delay any interest rate cuts. This uncertainty is rippling through crypto markets, which had just seen strong inflows and a Bitcoin rally past $123,000.
Ultimately, crypto tends to thrive when inflation cools and the Fed adopts a more dovish tone. That environment boosts liquidity and risk appetite, sending digital asset prices higher. But with inflation trending higher and Fed cuts less likely in the near term, Bitcoin and other cryptocurrencies are once again at the mercy of central bank signals and broader market risk sentiment.
Markets pull back from highs as CPI comes in hotter than expected first appeared on TheStreet on Jul 15, 2025
This story was originally reported by TheStreet on Jul 15, 2025, where it first appeared.