Bitcoin climbed above $65,000 on Thursday after weaker-than-expected U.S. producer inflation data reduced expectations of a Federal Reserve rate hike in July. The total crypto market capitalization rose above $2.3 trillion, with Ethereum topping $1,900 for the first time since early June.
Softer PPI fuels risk appetite
The U.S. Bureau of Labor Statistics reported that the June Producer Price Index (PPI) fell 5.5% year over year, below the 6.2% consensus estimate. On a monthly basis, producer prices declined 0.3%, the sharpest drop since April 2025. Core PPI, excluding food and energy, rose 4.7% from a year earlier, also missing expectations of 5.1%. The data came one day after a softer Consumer Price Index (CPI) report, which had already lifted Bitcoin and the broader crypto market.
Fed rate hike odds plunge
Expectations for a July rate hike tumbled across markets. The CME FedWatch Tool showed only a 10.2% probability of a rate increase at the July 29 Federal Open Market Committee meeting, down from roughly 16% after the CPI release and well below levels above 30% last week. Crypto prediction markets were even more confident: Polymarket placed the odds of a July hike at just 4%. Markets also reduced the likelihood of an additional rate hike before end-2026 to about 51%, from roughly 71% at last week's peak.
Cautious Fed, bullish crypto
Federal Reserve Chair Kevin Warsh urged caution during Tuesday's House testimony, warning that one encouraging inflation report does not mean the central bank's work is done. The Fed remains committed to returning inflation to its 2% target. However, for crypto investors, the back-to-back downside surprises in CPI and PPI have shifted focus back to monetary policy, supporting demand for risk assets like Bitcoin and Ethereum. Analysts linked part of last month's cooling inflation to lower energy costs following the now-ended ceasefire agreement between the United States and Iran.