US June CPI Cools More Than Expected, Bitcoin Surges Toward 65,000 Level

TradingKey - CPI data came in lower than expected across the board, boosting Bitcoin's price to surge close to $65,000. Can it rise further and break through this key level?

On July 15, US June CPI data boosted Bitcoin ( BTC) prices, which surged nearly 4% to hit a high of $64,988.65, just a stone's throw away from the key psychological milestone of $65,000! Prior to the release of the CPI data, BTC was capped below $64,000. This rebound reversed its previous weakness.

Yesterday, the June CPI data released by the US Bureau of Labor Statistics showed a historic cooling that beat expectations, as detailed below:

The sharp cooling of inflation in June was mainly attributed to a brief ceasefire agreement reached between the US and Iran in June. Although the agreement subsequently ended, it successfully pulled global energy and oil prices back from their highs during June. Data showed that the energy index fell sharply by 5.7% in a single month in June, with gasoline prices plunging by 9.7%, completely offsetting the slight increases in food and housing costs.

Previously, due to the rebound in oil prices, the market was extremely worried that the new Federal Reserve Chairman Kevin Warsh would wield a hawkish stick of further interest rate hikes during his congressional debut. Now, with a 3.5% inflation rate and flat core CPI, the Federal Reserve has been released from its 'interest rate shackles.' Traders have significantly scaled back bets on rate hikes, causing Bitcoin to stage a dramatic 'ground-breaking' surge after the data release, powering through all obstacles from around $62,000 to move aggressively close to $6.5 early this morning.

Although the June CPI data delivered a perfect scorecard, the military confrontation between the US and Iran in the Strait of Hormuz in early July has already pushed crude oil prices back to $80 per barrel. Therefore, whether inflation in July will reignite due to the resumption of hostilities remains a potential concern for the second half of the year.

In addition, Bitcoin's rebound this time was not very strong and failed to break through $65,000 in one go, indicating that bulls are relatively cautious. On one hand, the new Federal Reserve (Fed) Chairman Kevin Warsh's congressional debut still showcased an extremely hawkish style, pouring cold water on the partying market by refusing to disclose any timetable for future rate cuts. On the other hand, the Strait of Hormuz crisis has escalated again, with frequent recent skirmishes between the US and Iran, raising the possibility of a rebound in inflation.

From a technical perspective, Bitcoin is hovering right on the upper boundary of the descending channel, so there is still a possibility of falling back into that zone. If so, it would signal the end of this round of Bitcoin's rebound, and the second half of the year will continue to be characterized mainly by volatile bottoming out. However, if Bitcoin can break through and stabilize above $65,000, it will reverse this weak trend and head towards a new bull market.

Bitcoin price chart, source: TradingView