Bitcoin trades sideways after US inflation rises to its highest level in two years

US Consumer Price Index data for May showed inflation rising in line with economists’ expectations, reviving concerns about the future path of US interest rates and their impact on risk-sensitive assets, particularly cryptocurrencies.

In trading, Bitcoin fell 0.1% to $62,200 as of 14:43 GMT on CoinMarketCap.

Inflation data revives rate-hike concerns and crypto market volatility

Annual inflation accelerated to 4.2%, its highest level since April 2023.

Core inflation, which excludes food and energy prices, rose to 2.9%, its highest reading in nine months and also matched market expectations.

The figures are viewed as concerning for financial markets, particularly because the Federal Reserve considers a 2% inflation rate to be its long-term target.

According to The Kobeissi Letter, expectations for future interest-rate increases have started to rise again, potentially triggering additional selling pressure in the cryptocurrency market, which remains highly volatile and sensitive to monetary policy expectations.

Despite those concerns, Bitcoin initially posted a surprise rally after the release of the data, briefly approaching the $62,000 level before retreating toward $61,500, according to TradingView data.

Most major cryptocurrencies followed a similar pattern, including Ethereum (ETH), Solana (SOL), and XRP, all of which experienced sharp swings following the inflation report.

Despite the initial rebound, markets remain highly volatile, and the short-term direction for cryptocurrencies remains unclear as investors continue to await further signals regarding US monetary policy.