Bitcoin's Rally Loses Momentum as Softer CPI Fails to Seal a Fed Pivot; Oil Above $85 Keeps Inflation Risks in Play

Excerpted from CoinDesk's "Daybook" newsletter. Bitcoin (BTC) climbed to $64,669.87 on Tuesday before the move ran out of steam as traders concluded that a weaker-than-expected U.S. inflation print still wasn't enough to push the Federal Reserve toward an interest-rate cut. BTC remained up about 3% over 24 hours but slipped 0.5% since midnight. Ether (ETH) was up 4.7% on the day, also giving back 0.5%. Rate expectations reset quickly. On Polymarket, the implied odds of a rate increase fell from 34% to 6.7% after the data. Bettors now see a 93% chance the Fed holds rates steady this month, while CME's FedWatch, based on 30-day fed funds futures pricing, shows just a 14.4% probability of a hike. "Crypto's reaction to the latest CPI report shows the market is becoming more selective in how it interprets macro signals," Markus Levin, cofounder of XYO, told CoinDesk. "While falling inflation reduces pressure on markets and improves the outlook for risk assets, traders are no longer assuming that every favourable inflation print will automatically lead to rate cuts or new all-time highs." Fed Chair Kevin Warsh has also cautioned that a single encouraging inflation report does not amount to victory, leaving the next policy step dependent on incoming data. In Europe, a July rate cut from the European Central Bank is now viewed as effectively off the table. Brent crude above $85 a barrel is keeping inflation risks elevated. Markets are now looking to U.S. producer-price data due later today and the PCE inflation report near month-end for clearer direction. Levin said attention has shifted to whether inflation can keep cooling without rebounding. That puts bitcoin's next move less on the July decision itself and more on whether disinflation continues even as oil prices rise. Geopolitical developments also remain a key swing factor given their impact on oil and gas flows. CoinDesk notes that Hyperliquid's HYPE, measured against bitcoin on a weekly chart, is showing a bearish RSI divergence that continues to play out, pointing to further relative downside. The launch today of perpetual futures tied to pre-IPO shares of CXMT (ChangXin Memory Technologies) could alter that setup. The contracts will trade on Trade.xyz as a HIP3 market, meaning trading volume directly benefits HYPE. CXMT, China's largest DRAM memory-chip maker, is expected to begin trading following an $8.6 billion IPO in Shanghai toward the end of the month.