Cool June CPI Ignites Crypto Rally, Bitcoin Jumps Toward $65,000

A softer-than-expected U.S. inflation report sent crypto sharply higher, as traders priced in less pressure for near-term policy tightening. June CPI fell 0.4% month over month, the steepest monthly decline since April 2020. The annual CPI rate eased to 3.5% from 4.2% in May, below the 3.8% consensus. Core CPI cooled to 2.6% and was effectively flat on the month. Bitcoin surged from around $62,000 and quickly reclaimed roughly $64,900. Ether rallied about 7% to $1,884. Roughly $300 million in short positions were liquidated, adding fuel to the move as bearish bets were squeezed. The release lands as the final major inflation data point ahead of the Federal Reserve's July 28–29 meeting. The softer print undermines the near-term argument for more aggressive tightening that has weighed on risk assets through the summer. Even so, market pricing shifted in a different direction after the data and Fed commentary. On Polymarket, the implied odds of a July rate cut sank from 35% to about 6%. Expectations for at least one rate hike by year-end remain near ~80%, down from ~90%. Within hours of the CPI release, Fed Chair Kevin Warsh appeared on Capitol Hill for his first congressional testimony since succeeding Powell. He struck a confident long-horizon tone, saying: "If we get policy right—and we will—the inflation surge of the last five years will be a thing of the past." Warsh emphasized business investment, particularly in AI, as a defining theme and suggested "AI investment" will soon simply be called "investment," portraying it as disinflationary. He also rejected the idea that the latest CPI marks a definitive win. Asked whether the data meant "mission accomplished," Warsh responded: "that is not my view." He offered no forward guidance and reiterated the committee has "no tolerance" for persistently elevated inflation. Bottom line: the CPI print triggered a powerful short-covering burst in crypto, but the Fed's messaging stayed cautious. Some traders may read Warsh's remarks as hawkish, keeping the prospect of additional tightening alive into 2026. With the FOMC two weeks away, markets will look there for clearer direction.