Bitcoin Price Surges Past $63,000 as New Inflation Data Eases Interest Rate Concerns

Bitcoin (BTC-USD) rose past $63,000 after a new government report showed that price increases in the United States slowed down in June. This news gave investors hope that the Federal Reserve might not raise interest rates again this month. Bitcoin reached a high of $64,300 during the day, while other digital currencies like Ethereum (ETH-USD) also jumped significantly on the news.

The jump brings some relief to the cryptocurrency market, which has faced pressure lately. Before the new inflation data came out, rising oil prices and political tensions had made investors nervous about higher interest rates. This new report helped turn crypto market sentiment around, leading to a quick recovery for digital assets.

Federal Reserve Chairman Fights Rising Prices

Federal Reserve Chairman Kevin Warsh spoke to Congress on Tuesday to discuss the state of the economy. During his testimony, he made it clear that the central bank remains focused on bringing inflation down to its 2% target. He noted that while the overall economy and financial markets remain solid, high mortgage rates continue to hurt the housing market.

Kevin Warsh also addressed the cryptocurrency market during his questioning. He told lawmakers that he does not want the Federal Reserve to get into the “bailout business”. He specifically added that this rule applies to crypto companies, meaning no central bank bailouts are coming for the digital asset industry.

Slower Inflation Reduces Rate Hike Worries

The new consumer price index report showed that inflation was much softer than experts had expected. Core inflation, which does not include volatile food and energy costs, remained completely flat in June. This unexpected drop brought the year-over-year core inflation rate down to 2.6%, beating expectations of 2.8%.

This flat inflation reading immediately changed expectations for future interest rate moves. Before the report, traders believed there was a high chance the Fed would raise rates at its upcoming July meeting. After the data was released, the odds of a July rate hike quickly fell from nearly 50% down to just 12%.

Mizuho Downgrades Circle Stock

Even though most digital assets gained value, some cryptocurrency companies struggled on Tuesday. Circle Financial stock (CRCL) fell nearly 3% after the banking firm Mizuho (MFG) lowered its rating on the company. Mizuho analyst Dan Dolev downgraded the stock to underperform and cut his price target to $50.

The bank pointed to rising competition in the stablecoin market as a major reason for the downgrade. A new rival coin called Open USD is expected to take market share and lower Circle’s profits over the next few years. Meanwhile, overall trading volume for spot Bitcoin exchange-traded funds has dropped 78% from its peak, showing that investor attention has shifted to other tech stocks.

At the time of writing, Bitcoin’s price is sitting at $64,624.64.