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

Consumer prices rose at their fastest annual pace in three years, inflation numbers released on Wednesday showed, supporting expectations that the Federal Reserve will maintain a restrictive policy stance and potentially put further pressure on crypto prices.

The Consumer Price Index rose 4.2% in May from a year earlier, the U.S. Bureau of Labor Statistics said on Wednesday. The increase, which was in line with economists’ expectations, marked the third straight month in which inflation’s annual pace accelerated.

On a monthly basis, the bureau indicated that inflation rose 0.5%, an increase largely driven by surging energy costs that matched economists’ forecasts. The report comes amid renewed conflict between the U.S. and Iran, a clash that’s squeezed global oil supplies.

Although annual inflation hit its highest level since May 2023, Bitcoin advanced following Wednesday’s snapshot, edging up to roughly $61,750 from $61,000 over a 15-minute period. It later changed hands at $62,000, a 0.3% increase over the past day, according to CoinGecko.

Ethereum, XRP, and Solana also ticked higher at $1,650, $1.12, and $65, respectively. Although XRP remained 1.6% lower from a day earlier, Ethereum and Solana turned positive, resuming a rebound from Friday’s selloff that coincided with strong jobs numbers.

The Fed has tried for years to deliver inflation back to its 2% target, yet the war in the Middle East has complicated the U.S. central bank’s outlook and negated months of progress. 

The increase marks the first under Fed Chair Kevin Warsh. His predecessor, Jerome Powell, resisted constant pressure from President Trump to lower borrowing costs. The central bank has held its benchmark interest steady at a target range of 3.5% to 3.75% throughout 2026.

Risk assets, including stocks and crypto, typically face pressure as interest rates rise and the payouts on holding cash and U.S. Treasuries become more attractive. That means non-yielding assets like Bitcoin and gold tend to become less appealing to investors.

“For Bitcoin, an in-line print is unlikely to be a clean catalyst,” Iggy Ioppe, chief investment officer at trading infrastructure platform Theo, told Decrypt. “It keeps liquidity expectations capped and risk assets trading more on positioning than on a fresh dovish impulse.”

Traders anticipate that the Fed will be forced to hike interest rates at least once before year’s end to put a lid on rising consumer prices, per CME Watch. Before geopolitical shocks emerged, traders penciled in as many as three cuts earlier this year.