Bitcoin Drops 5% as U.S. Inflation Surges 0.3%

Bitcoin experienced a significant decline as inflation in the U.S. surged. The U.S. Bureau of Labor Statistics reported that inflation climbed 0.3% in June, bringing the annual inflation rate to 2.7%. This increase was largely attributed to the aggressive tariff policies implemented by U.S. President Donald Trump, which economists had long warned could lead to runaway inflation. Despite initial skepticism, the economy had shown resilience, with employment data remaining positive and inflation staying lower than expected. However, the recent spike in inflation has raised concerns about the long-term effects of these policies.

Bitcoin's price reacted sharply to the news, falling below $117,000 after reaching a high of $123,000 the previous day. The cryptocurrency has been volatile, trading between $115,765.69 and $120,488.41 over the past 24 hours. The market capitalization of Bitcoin also eased by 3.3%, settling at approximately $2.31 trillion. This decline in Bitcoin's value comes as analysts and economists debate the impact of inflation on the cryptocurrency market. Some experts suggest that the recent inflation spike could be a lagging indicator of the consequences of Trump's tariff policies, which have been criticized for their potential to disrupt global trade and economic stability.

Trump, who has been vocal about his trade strategies, has called for the Federal Reserve to cut rates or for Chairman Jerome Powell to resign. Trump characterized June's inflation figures as "very low" and urged the Fed to cut rates by 3 points, claiming that this would save the U.S. one trillion dollars a year. However, Powell has been reluctant to cut rates until inflation falls below the Fed's 2% target. The president's stance on inflation and monetary policy has added to the uncertainty in the market, with some investors worried about the potential for further economic instability.

Despite the recent decline, Bitcoin has appreciated by 7.3% since last week, indicating that the cryptocurrency market remains dynamic and responsive to economic indicators. The total open interest for BTC futures fell by 2.12%, currently standing at around $86.03 billion. Bitcoin liquidations also fell dramatically after multiple days of heavy losses for short sellers, with total liquidations standing at $36.01 million. Short sellers accounted for $6.39 million of that figure, while bulls had $29.62 million wiped out on their long positions. This volatility highlights the sensitivity of the cryptocurrency market to economic news and policy changes.