Key Highlights
- U.S. CPI fell 0.4% in June, the largest monthly decline since April 2020, while annual inflation cooled to 3.5%.
- Bitcoin jumped above $63,000 and Ethereum crossed $1,820 immediately after the inflation report.
- More than $56 million in crypto short positions were liquidated within one hour as prices moved higher.
Bitcoin and Ethereum prices jumped on Tuesday after a surprisingly cooler U.S. inflation report eased concerns over another near-term Federal Reserve rate hike and triggered a sharp liquidation of bearish crypto positions.
Bitcoin climbed above $63,300, gaining nearly 1% within an hour, while Ethereum rose 1.4% to trade above $1,820, according to CoinMarketCap data captured shortly after the U.S. Consumer Price Index release.
Ethereum was up nearly 3% over 24 hours during the initial move, while Bitcoin gained about 1.3%. XRP also rebounded intraday and traded near $1.07, with its 24-hour range between $1.06 and $1.08.
The broader crypto market also turned higher, with the CoinMarketCap 20 Index gaining 1.42% in the market snapshot. The move came minutes after U.S. inflation data showed price pressures cooled much faster than economists had expected.
US CPI Falls 0.4% as Inflation Cools to 3.5%
The U.S. Consumer Price Index fell 0.4% in June on a seasonally adjusted basis, reversing a 0.5% increase in May, the Bureau of Labor Statistics reported on July 14.
It was the largest one-month CPI decline since April 2020. Annual inflation also slowed to 3.5% from 4.2% in May.
The report came in cooler than market forecasts. Economists surveyed ahead of the release had expected annual inflation of around 3.8%, with core inflation at 2.8%. The actual core CPI reading slowed to 2.6% year over year.
More importantly, core prices, which exclude volatile food and energy costs, were unchanged in June after rising 0.2% in May.
A 5.7% monthly decline in energy prices was the biggest contributor to the headline CPI drop. Gasoline prices fell 9.7%, although food prices continued to rise by 0.2%.
For crypto traders, the softer reading reduced immediate concerns that persistent inflation would force the Federal Reserve to tighten monetary policy more aggressively.
The Fed held its benchmark interest rate at 3.5% to 3.75% during its June meeting. The central bank’s next scheduled policy meeting is set for July 28-29.
Crypto Shorts Get Wiped Out as BTC and ETH Jump
The initial crypto rally quickly turned into a short squeeze.
CoinGlass data captured during the move showed $60.21 million in crypto positions liquidated within one hour. Short traders accounted for $56.27 million, compared with only $3.94 million in long liquidations.
Over four hours, total liquidations reached $77.23 million, including $68.25 million in shorts.
Bitcoin led the liquidation heatmap with $28.84 million wiped out, followed by Ethereum at $20.70 million.
The imbalance suggests bearish traders positioned for either a hotter inflation reading or continued weakness in the crypto market were forced to close positions as Bitcoin and Ethereum moved higher.
Forced short liquidations can accelerate a rally because exchanges automatically buy back assets to close leveraged bearish positions.
Why Are Bitcoin and Ethereum Going Up Today?
The CPI report matters for crypto because inflation remains one of the biggest variables influencing U.S. interest rate expectations.
Higher inflation can keep borrowing costs elevated or push the Fed toward further rate hikes. That generally creates pressure on risk assets as investors receive higher returns from cash and government debt.
A cooler CPI print reduces some of that pressure.
Tuesday’s data was particularly significant because both headline and core inflation slowed. Annual core CPI fell from 2.9% in May to 2.6% in June, moving closer to the Federal Reserve’s 2% inflation objective.
However, the report does not mean inflation concerns have disappeared.
Headline inflation remains at 3.5%, while energy prices are still 15.7% higher than a year ago and food prices have increased 3% over the same period.
That leaves the Federal Reserve with another month of economic data to assess before deciding whether its policy stance needs to change.
What Happens to Bitcoin Price Next?
Bitcoin’s immediate recovery has pushed the price away from its 24-hour low of $61,769. The cryptocurrency reached a daily high near $62,908 in live CoinMarketCap data, while the earlier post-CPI market snapshot showed BTC briefly trading above $63,300 as volatility increased.
Ethereum traded between $1,749 and $1,802 over the latest 24-hour period on CoinMarketCap, before the immediate CPI reaction pushed it above $1,820 in the captured market move.
Despite the rally, overall crypto sentiment remained cautious. The CoinMarketCap Fear and Greed gauge stood at 29, in the “Fear” zone, in the market snapshot.
The next test is whether Bitcoin can hold its post-CPI gains after the short squeeze fades. A sustained move will increasingly depend on how traders reprice the Federal Reserve’s July and later 2026 policy decisions rather than the initial inflation reaction alone.
Also Read: Crypto Market Up as US CPI Falls 0.4%, Sharpest Drop Since 2020
