Bitcoin's price fell near $63,500 following a U.S. inflation report that met expectations, calming market nerves but failing to trigger a significant crypto rally.
Bitcoin's value dropped to around $63,500, declining over half a percent for the day and nearly 2% for the week. The U.S. inflation report for July aligned with forecasts, alleviating some concerns but not providing enough momentum for a widespread surge in the cryptocurrency market, which saw most major tokens decrease in value.
Despite the inflation figures, which showed a 0.1% increase for the month and a 3.4% year-over-year rise, the report did not significantly impact expectations for the Federal Reserve's interest rate decisions. This led to a minor uptick in gold and equities, while digital assets showed only modest gains.
Hyperliquid's HYPE token stood out, increasing over 3% to $56, although it remained unchanged for the week. Tron rose slightly to just under 34 cents, marking a 2% weekly gain. In contrast, Dogecoin fell nearly 3% to 7 cents, XRP dropped over 1% to $1, and BNB lost more than 1% to $610. Solana fell slightly below $76 and ether dipped marginally to $1,880.
The inflation report indicated that while the core measure, excluding food and energy, increased by 0.2% and eased to 2.5%, the overall data did not significantly alter the likelihood of a Federal Reserve rate hike in September. Futures markets adjusted the odds of a rate increase to approximately 38%, down from 46% prior to the report. Following the news, gold rose by 1.3%, ether increased just over 1%, bitcoin gained about half a percent, and S&P 500 futures went up by 0.2%.
Gabe Selby, head of research at CF Benchmarks, remarked that bitcoin typically reacts more vigorously when inflation data prompts a reassessment of rate expectations, noting an average increase of 3.25% in instances where inflation was lower than anticipated. He highlighted that an inline report can mitigate risks but requires a genuine surprise to act as a catalyst for significant price movements. Selby also pointed out that there is potential for the Fed to adopt a wait-and-see approach, given that shelter costs rose just 0.1% while energy and gasoline prices fell by 1.5% and 2.9%, respectively.
Looking ahead, market participants are now focused on several key upcoming events: the Jackson Hole symposium later this month, the September 4 jobs report, and the September 11 inflation release.
In contrast to the crypto market, equities responded more positively to the inflation news. The MSCI Asia Pacific index increased by almost 1%, buoyed by significant contributions from Samsung Electronics and SK Hynix, while Korea's Kospi surged nearly 4%, entering a technical bull market with a 22% rise over the past ten days. However, not all sectors fared well; Cisco's stock fell over 4% after disappointing earnings, and Cerebras Systems saw a 17% drop due to declining hardware sales.
Brent crude oil prices ended a six-day streak of gains, retreating from a peak of $90 per barrel. This decline was influenced by statements from General Mohammad Reza Naqdi of the Islamic Revolutionary Guard Corps, indicating Iran's readiness to conduct operations on U.S. soil under a new military strategy.