Bitcoin Surges 3% as US Inflation Data Boosts Crypto Assets

Bitcoin (BTC) experienced a significant price movement on June 12, as it bounced back from a low of $106,600 on Bitstamp. This rebound came after the release of the US Producer Price Index (PPI) data, which showed a lower-than-expected increase, marking the lowest rise since September 2024. This data followed a similar trend from the Consumer Price Index (CPI) released the previous day, providing a double boost for crypto and risk assets.

The cooling inflation data suggests that the Federal Reserve may have more room to lower interest rates sooner, which could benefit liquidity inflows into crypto and risk assets. However, the Fed has maintained a hawkish stance on policy for 2025, despite protests from US President Donald Trump. According to the latest data from CME Group’s FedWatch Tool, markets are now pricing in the next Fed rate cut at its September meeting, with no change expected at the June 18 meeting of the Federal Open Market Committee (FOMC).

As a result of the inflation numbers, the US dollar index (DXY) dropped to its lowest levels since March 2022, indicating a weakening of the US dollar. This weakening dollar strength has historically favored Bitcoin and other crypto assets, as investors seek alternative stores of value. Trading firm QCP Capital noted that despite a modest pullback, macro conditions remain constructive for further institutional engagement and capital deployment into digital assets.

Bitcoin traders were uncertain about short-term BTC price action after BTC/USD fell nearly $4,000 in 24 hours. Popular trader Daan Crypto Trades predicted that if the price breaks either the current monthly high or low, it will likely continue trending in that direction for the rest of June and possibly beyond. Fellow trader Killa echoed this sentiment, noting that the $106,000-$107,000 level is crucial for market structure and that a failure to hold this level could result in a fill of the CME gap below. Killa also expected new all-time highs of up to $116,000 to come before the end of June.

In summary, Bitcoin's price movement on June 12 was driven by positive inflation data, which weakened the US dollar and boosted crypto assets. The cooling inflation data suggests that the Federal Reserve may have more room to lower interest rates, which could benefit liquidity inflows into crypto. However, traders remain uncertain about short-term price action, with some predicting new all-time highs before the end of the month. The weakening US dollar and constructive macro conditions continue to favor institutional engagement and capital deployment into digital assets.