Bitcoin Reacts to First CPI Jump Since February – What Traders Are Missing

Bitcoin''s price just got a jolt from an unlikely source – the first CPI uptick in months. Here''s why crypto markets are paying attention.

Inflation''s back? Bitcoin''s got something to say about that.

The king of crypto never moves predictably – but when traditional economic indicators twitch, digital gold tends to react faster than Wall Street''s coffee-fueled traders. This time? The Consumer Price Index finally broke its streak, and BTC responded with characteristic volatility.

Forget ''hedge against inflation'' memes – this is about liquidity flows. When fiat currencies sweat, crypto markets breathe. The real question isn''t whether Bitcoin cares about CPI data (it does), but whether traditional finance will ever understand why.

Meanwhile, goldbugs and Fed watchers are still drawing trendlines on parchment. Wake up, Boomers – the future''s moving at blockchain speed.

Inflation Rose To 2.4% in May, US CPI Data Shows

The US Bureau of Labor Statistics (BLS) released the Consumer Price Index (CPI), showing that inflation ROSE at an annual rate of 2.4% in May, after 2.3% Year-on-Year (YoY) in April.

BREAKING

US CPI DATA CAME IN AT 2.4%

EXPECTATIONS: 2.5%

THIS IS BULLISH

This is the first time CPI has increased in 3-4 months. In the immediate aftermath, Bitcoin recorded a modest surge, rising toward $110,000 as of this writing.

Ahead of the US CPI data release, consensus expected the headline reading to rise by 0.2% month-over-month (MoM) and accelerate to 2.5% year-over-year (YoY).

Perhaps, the expectation of rising inflation explains the modest surge in the bitcoin price, as the impact was already priced in.

“If CPI > 2.5%, expect a sell-off as the chances of Fed rate cut will go lower. If CPI = 2.5%, a sell-off will happen but the dip will be for buying. If CPI

Notably, several banks expected the May CPI to show mild headline inflation and monthly Core inflation close to the median reading from the previous 12 months.

Meanwhile, it is easy to pinpoint what caused the US CPI inflation data to rise in May. All signs point to Trump’s tariffs, with the latest data indicating the first impact of the trade policies in the US, particularly on goods inflation.

“Expectations are for a slight increase compared to last month which is likely due to the increase in OIL and some of the tariffs that are getting pushed through to consumers,” wrote analyst Daan Crypto Trades.

With the CPI inflation data priced in, focus shifts to additional US indicators this week, namely initial jobless claims and PPI, due for release tomorrow, June 12. Beyond that, interest will also be on the Federal Reserve’s (Fed) policy decision next week.

Next Wednesday, the Fed will release policymakers’ interest rate decision for their June 17/18 meeting, followed by Chairman Jerome Powell’s speech.

The US CPI is a lagging indicator, making it a primary focus for inflation targeting and, therefore, tied to the Federal Reserve’s 2% target. The US CPI inflation data today will affect the FOMC’s interest rate decision next week.

According to the CME FedWatchTool, there is a 99.8% chance the Fed will keep interest rates steady at 4.25-4.50% in the next meeting. This is as opposed to the 99.9% chance before the CPI data today that the Fed WOULD keep interest rates steady.

However, despite the perceived impact of Trump’s tariffs on US inflation, Powell articulated that political pressure will not influence the Fed’s policy decision.

With inflation still rising above the Fed’s 2% target, policymakers may continue to take a cautious approach. 

“The market generally expects the Federal Reserve to continue to take a wait-and-see approach…market movements will still be event-driven, with the key factors being adjustments to interest rate cut expectations following the Federal Reserve meeting and officials’ statements,” Bitunix analysts told BeInCrypto.

Beyond inflation, however, the labor market is also becoming a fundamental macroeconomic catalyst for Bitcoin. The Fed may only need a resilient labor market and an economy that has not derailed so far to cut interest rates.