Bitcoin, Ethereum Rebound as US Inflation Hits 3-Year High

Bitcoin and Ethereum resumed their rebound on Wednesday after US inflation data came in hotter than expected, hitting a three-year high. The Consumer Price Index (CPI) rose 5.4% year-over-year in May, the highest reading since 2023, according to the Bureau of Labor Statistics. Core CPI, excluding food and energy, also rose 4.2%, above forecasts. The data suggests that inflationary pressures remain persistent, which could keep the Federal Reserve on a hawkish path. For crypto markets, higher interest rates typically reduce liquidity and risk appetite, as investors shift toward yield-bearing assets like US Treasuries, whose yields have been climbing alongside the dollar index (DXY). A stronger DXY historically correlates with Bitcoin weakness, as it signals tighter global dollar liquidity. However, Bitcoin and Ethereum have shown resilience in recent sessions, with both assets gaining over the past 24 hours. This resilience may be partly attributed to the ongoing Bitcoin halving cycle, which historically reduces miner selling pressure and creates supply scarcity. Additionally, exchange reserve drawdowns suggest that long-term holders are accumulating, while whale concentration data shows large wallets increasing their positions. Live crypto prices and charts on NowPrice show how the market is reacting to the macro backdrop.

Traders are now watching for the Fed's next policy decision in July. If inflation continues to run hot, the central bank may signal further rate hikes, which could weigh on risk assets including cryptocurrencies. Higher rates raise the opportunity cost of holding non-yielding assets like Bitcoin and Ethereum, and also increase miner break-even costs, potentially forcing some miners to sell. On the other hand, any signs of easing price pressures could fuel a more sustained rally. The recent ETF flow dynamics have also been a key driver: spot Bitcoin ETFs have seen net inflows, providing a demand-side buffer against macro headwinds. Bitcoin dominance remains elevated near 55%, indicating that capital is rotating from altcoins into Bitcoin as a safe haven within crypto. Key levels to monitor include Bitcoin's resistance near $30,000 and support at $28,000, while Ethereum eyes $1,900 as a potential breakout zone. A break above these levels could trigger further upside, especially if on-chain metrics show continued accumulation and declining exchange balances.