US PPI inflation fell 0.3% in June, the first monthly decline since August 2025. Bitcoin (BTC) reclaimed $65,000 and Ethereum (ETH) topped $1,900 as traders cut bets on a July Fed rate hike.

The producer data landed one day after consumer inflation also missed forecasts. Together, the two reports have shifted market expectations decisively against further Federal Reserve tightening this month.

PPI Inflation Reinforces the Disinflation Trend

Bureau of Labor Statistics data showed headline PPI at 5.5% year-over-year, below the 6.2% consensus. Core PPI eased to 4.7% against a 5.2% forecast. May’s monthly rise was also revised down from 1.1% to 0.6%.

The 0.3% monthly drop was the sharpest since April 2025. Only a month ago, annual PPI stood at 6.5%, its highest level since December 2022.

Energy drove most of the relief. Gasoline prices fell 12%, accounting for nearly two-thirds of the 1.4% slide in final demand goods.

Even after that drop, gasoline remains nearly 43% higher than a year earlier. Services held firmer, with trade margins up 0.4%.

The print builds on the CPI surprise a day earlier, when consumer inflation cooled faster than economists anticipated. Both reports strengthen the case for lower Treasury yields, supporting equities and digital assets alike.

Fed Hike Odds Collapse as Crypto Rallies

CME FedWatch data now shows an 87.7% probability that the Fed holds rates at 3.50% to 3.75% on July 29. Hike odds dropped to 12.3%.

The repricing came fast. Markets saw a 31% chance of a hike just one week ago, before consecutive soft inflation reports flipped the positioning.

The central bank held rates steady at Chair Kevin Warsh’s first meeting in June, flagging inflation risks from artificial intelligence spending.

Warsh struck a harder tone in congressional testimony a day before the release, saying the central bank has

“No tolerance for persistently elevated inflation,” Kevin Warsh, Federal Reserve Chair said in his testimony.

Bitcoin traded near $65,256 after the release, up 2.5% in 24 hours. Ethereum gained 3.6% to $1,930, its first move above $1,900 since early June.

The rebound liquidated nearly $100 million in crypto shorts within 30 minutes. A similar short squeeze fueled Bitcoin’s recovery in early July, when weak jobs data drove BTC to the $62,000 area.

Still, the relief may prove fragile. Gasoline drove much of June’s decline, and oil has pushed above $85 after President Donald Trump announced a Strait of Hormuz blockade on Monday.

The waterway carries about one-fifth of the world’s oil. A hotter energy print could stall the disinflation story as soon as next month.

The next test for BTC sits at the $66,000 resistance zone that has capped gains since mid-June.

Source: BeInCrypto