GoCheckMyCrypto.comBitcoin Slips as July Rate-Hike Bets Climb Before CPI and Warsh Testimony
Major cryptocurrencies fell 2% or more in 24 hours, with bitcoin dropping to $62,380, as money markets repriced July Fed rate-hike odds to roughly 50% from about 10% days earlier. The move follows an oil surge, a reinstated Hormuz blockade, and hawkish Fed remarks ahead of Tuesday's June CPI report and Fed Chair Kevin Warsh's testimony.
The odds of a Fed rate hike this month have gone from a fringe scenario to a coin flip in a matter of days, and crypto is feeling it. Bitcoin dropped over 2% in 24 hours to $62,380, with ether and XRP nursing similar losses, according to CoinDesk data.
This is a macro story reaching straight into the crypto tape: what moves prices right now is rate expectations, oil, and geopolitics, and two events on the calendar will resolve the tension. Here is what is driving it and what to watch.
Money markets now assign roughly a 50% probability to a Fed rate hike this month, up sharply from about 10% just days ago, according to Bloomberg data cited by CoinDesk. The repricing followed remarks from Fed Governor Christopher Waller that officials may need to raise rates to bring price pressures under control. The two-year U.S. Treasury yield, the part of the curve most sensitive to near-term policy expectations, rose to 4.29%, its highest level since early last year.
The inflation pressure has a physical driver. CoinDesk reports that President Donald Trump reinstated a U.S. blockade of Iranian vessels transiting the Strait of Hormuz and demanded a 20% reimbursement fee on all other cargo passing through the waterway. West Texas Intermediate crude futures surged to nearly $80 a barrel from $67 at the start of the month, stoking fresh inflation concerns.
Two data points now dominate. The Labor Department releases the June consumer-price index Tuesday at 8:30 a.m. ET. Economists surveyed by Bloomberg forecast headline CPI will fall below a 4% annual rate, which would mark the first declines in both headline and core inflation since January, following May's readings of 4.2% headline and 2.9% core. After CPI, attention turns to Fed Chair Kevin Warsh's testimony on Capitol Hill. Warsh has a stated preference for limited forward guidance, so investors will watch for any signals on rates and inflation. ING analysts said Warsh 'has enough ammunition here to ride the rate hike risk and instead hold pat,' adding that even a delivered hike is 'likely to be subsequently reversed, with the prospect still for bigger cuts than hikes.'
The risks run against relief. Hike odds have quintupled in days, and Waller's remarks point in a hawkish direction. CoinDesk notes that even a soft June CPI print risks being viewed as backward-looking given the oil surge, and that more persistent inflation would amplify concerns about the Fed's path. Whether the Fed actually hikes in July is unresolved; the sources present roughly 50/50 odds and no confirmation either way.
Separately, in CoinDesk's live coverage of bitcoin holding $62,600 amid the Iran conflict, CleanSpark surged 14% after announcing a 20-year lease at its Sandersville, Georgia campus with a 'high-investment grade, leading technology company,' expected to generate $6.6 billion in revenue over the term, or $11.6 billion if two five-year extension options are exercised. That figure comes from the company's announcement and is not independently verified, and the counterparty was not named.
Money markets now assign roughly a 50% probability to a Fed rate hike this month, up from about 10% just days ago, according to Bloomberg data cited by CoinDesk.
Watch Tuesday's 8:30 a.m. ET CPI print and Warsh's testimony that follows: a sub-4% headline reading plus a hold-pat message would ease the hawkish repricing, while a hotter print or hawkish testimony would push hike odds higher. The premise here, that crypto is trading on macro rate expectations, would weaken if prices decouple from the yield and oil moves.
And that's the way it is.
Sources
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