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Bitcoin fell toward $62,500 on Tuesday as traders increased bets that the Federal Reserve could raise interest rates at its July meeting. Markets are awaiting the latest U.S. inflation report after higher oil prices and hawkish comments from a Fed official revived concerns about persistent price pressures.
Bitcoin Falls Ahead of Inflation Data
Bitcoin traded near $62,520, down about 0.4% from its previous close. The cryptocurrency moved between an intraday low of $61,794 and a high of $63,170.
Ethereum, XRP and other large cryptocurrencies also weakened as investors reduced exposure before the inflation release. The decline followed several days of pressure from higher energy prices, Treasury yields and rate expectations.
Bitcoin often reacts to changes in U.S. interest-rate expectations. Higher rates can strengthen the dollar and increase returns available from government debt, reducing demand for crypto and other risk assets.
July Rate Hike Probability Rises
Interest-rate futures put the chance of a 25-basis-point rate increase at the Federal Reserve’s July meeting near 42%. That was up from about 18% at the start of the month. The chance of two increases by the end of 2026 also rose to approximately 56%.
CME FedWatch uses prices from 30-day federal funds futures to calculate the probabilities. The figures reflect trader expectations and do not predict the Federal Reserve’s final decision.
The Federal Open Market Committee will hold its next policy meeting on July 28 and 29. The Fed’s current target range is 3.50% to 3.75%.
Waller Warns Rates May Need to Rise
Federal Reserve Governor Christopher Waller added to the policy concerns in a July 13 speech. He warned that above-target inflation combined with rising inflation expectations could require larger, faster and more persistent rate increases.
Waller had already argued in May that the Fed should remove language suggesting that its next move was more likely to be a rate cut. A rate increase should be considered as likely as a reduction if inflation fails to improve.
His comments followed a sharp rise in oil prices linked to renewed tensions involving Iran and the Strait of Hormuz. Higher energy costs can affect transportation and production expenses, raising the risk that inflation remains above the Fed’s 2% target.
June CPI Report Could Reshape Market Bets
The Bureau of Labor Statistics will release the June Consumer Price Index at 8:30 a.m. Eastern Time on July 14. The Producer Price Index is scheduled for the following day.
Economists expect annual headline inflation to slow below 4%, after reaching 4.2% in May. Core inflation, which excludes food and energy, is expected to remain close to 2.8% on an annual basis.
A weaker reading could lower expectations for a July rate increase and help Bitcoin. A stronger report could support higher rates and add more pressure to crypto prices.
Oil’s recent rise may not be fully reflected in the June data because much of the move occurred in July. Traders will still examine services, housing and core goods prices for signs that underlying inflation is easing.
Bitcoin Tracks Interest-Rate Expectations
Bitcoin is sometimes presented as protection against inflation because its maximum supply is fixed. Its short-term market performance has often weakened when inflation surprises raise expectations for higher interest rates.
The immediate direction will depend on the CPI result and the market’s response to it. Rate probabilities, Treasury yields and Bitcoin prices could move quickly after the report.
