US Inflation Tops 4%, Putting Pressure on Bitcoin and Gold

Market analysts are warning that Bitcoin and gold may face further challenges this year after US inflation rose to a three-year high in May, according to data from Trading Economics. The Consumer Price Index (CPI) increased by 4.2% annually, which may lead to rate hikes later this year, putting pressure on riskier assets like cryptocurrency.

Bitcoin has already had a difficult first half of the year, with prices falling 36% since January. Gold is also down 23% from its January peak, while crude oil prices have surged more than 50% over the same period.

Iggy Ioppe, chief investment officer at Theo, said that the CPI print keeps the Federal Reserve cautious and data-dependent, with no rush to cut rates. This is bad news for Bitcoin, which was unlikely to be a clean catalyst either way, keeping liquidity expectations capped and risk assets trading on positioning rather than fresh dovish impulses.

Markus Thielen of 10x Research also sees the current macro environment as a headwind for Bitcoin, predicting that a break below $60,000 appears increasingly likely over the coming days. He believes institutional investors will want to see further evidence that inflation is moving sustainably lower before increasing exposure to cryptocurrency.