Bitcoin climbed to $65,500 on July 12, its highest level since June 22, after the US Producer Price Index (PPI) came in cooler than expected for June. The move extended a rally sparked by the previous day's Consumer Price Index (CPI) release, which also surprised to the downside. The two consecutive inflation prints have boosted risk assets and shifted expectations for Federal Reserve policy.
PPI data fuels risk-on mood
The Bureau of Labor Statistics reported that the PPI rose 5.5% year-over-year in June, below forecasts, with a 0.3% monthly decline. The drop was driven by a 1.4% fall in prices for final demand goods, while services edged up 0.2%. Economist Mohamed El-Erian called the figures "much better than expected" and said they should boost equities and further temper market expectations for interest rate hikes. The CME Group's FedWatch Tool showed that the probability of a 0.25% rate hike at the September meeting has fallen, with a hold now the most likely outcome.
Bitcoin price action and resistance levels
Despite the bullish macro backdrop, traders remained cautious about Bitcoin's ability to sustain the rally. Analyst Daan Crypto Trades noted that liquidity sits above $65,600 and more importantly at $67,200. Breaking above the latter could open the door to $70,000 and position Bitcoin in the middle of its $60,000-$80,000 range. However, trader Rekt Capital warned that Bitcoin is approaching its 50-month exponential moving average, a level that has historically led to rejections during bear markets. Another trader, Killa, suggested that if past patterns repeat, Bitcoin could derisk for the remainder of the month and push back down.
Broader market context
The positive inflation data comes amid ongoing geopolitical tensions, including the US-Iran conflict and its impact on oil prices, which have not derailed the disinflation trend. The Kobeissi Letter noted that inflation expectations continue to decline, citing reduced bets on a Fed rate hike from Polymarket users. For now, Bitcoin's price action remains tied to macro data, with traders watching key resistance levels for confirmation of a sustained move higher.