Bitcoin gained half a percentage point after the May Consumer Price Index showed that prices rose 2.4% in May, showing that U.S. President Donald Trump's trade war has had a limited impact on prices.
It's worth noting that a 2.4% increase is lower than all 73 forecasters predicted in the latest Bloomberg survey.
The largest cryptocurrency by market capitalization was recently hovering just below $109,000, but has now risen closer to $110,000. BTC has gained 4.4% in the past seven days, amid renewed hopes for a settling of tariff tensions and as the list of companies plotting corporate Bitcoin treasuries has continued to grow.
Major altcoins performed similarly with Ethereum, the second largest crypto by value, and Solana has risen 1.7% in the past hour after having gained 7.3% in the past week. SOL is currently changing hands for $167.09, according to CoinGecko data.
"Crypto has so much momentum right now due to macro demand for Bitcoin and regulatory clarity for DeFi that the rally can probably continue whether the Fed cuts or not," Zach Pandl, head of research at Grayscale, told Decrypt in an email. The lower-than-expected reading could make it more likely that the Federal Reserve considers a rate cut.
"Fed rate cuts should be considered negative for the value of the dollar and positive for assets that compete with the dollar," he added, "including other foreign currencies, physical gold, and Bitcoin."
The CPI, a widely watched price measure, shows that prices climbed 0.2% compared to April, coming in lower than most economists' forecasts, sending the annual rate to 2.4%, still in excess of the U.S. central bank's 2% target. Core pricing, which strips away more volatile food and energy costs, rose by only 0.1% compared to from the previous month, sending that annual rate to 2.8%.
The latest ratings come after April inflation measures arrived cooler than expected, with the Personal Consumer Expenditures rising just 0.1%, buoying investors looking for a rate reduction.
The Federal Reserve has said it will base any cut on>Rate cuts are largely considered beneficial for digital assets. After cutting the rate to a range between 4.25% and 4.50%, the Fed has left rates intact at its last three meetings, much to Trump's ire.
The CME FedWatch tool calculated a 99% probability that the central bank would leave the current rate unchanged. It is unlikely to slash rates at its July meeting, but there is a more than 50% likelihood of a cut in September.
In an email Tuesday, Ruslan Lienkha, chief of markets, at Switzerland-based crypto services firm YouHodler wrote that "financial markets remain optimistic."
"There is a strong possibility that Bitcoin could soon reach a new all-time high, as the price currently stands just a few percentage points below its previous peak," Lienkha noted.
But he added warily that "the risk of a reversal remains, particularly if upcoming economic data disappoints. All eyes are now on tomorrow’s U.S. inflation report. While markets are pricing in a moderate uptick, a higher-than-expected reading could trigger increased volatility across risk assets, including cryptocurrencies."
Edited by Stacy Elliott.
