Bitcoin continued its upward trajectory on Wednesday, nearing the $65,000 mark for the first time in several weeks, as a wave of favorable inflation data and dovish Federal Reserve commentary bolstered risk appetite across financial markets. The world's largest cryptocurrency touched $64,800 during U.S. trading hours, gaining about 2.1% over the past 24 hours, before settling in a tight range around $65,000.
The rally was fueled by a series of macroeconomic developments that reinforced expectations of a peak in interest rates. The U.S. Bureau of Labor Statistics reported that the Producer Price Index (PPI) for June fell 0.3% month-over-month, defying forecasts for a flat reading and contrasting sharply with May's 0.6% increase. On a year-over-year basis, PPI rose 5.5%, well below the 6.2% consensus estimate and down from May's 6.0% gain. Core PPI, which strips out volatile food and energy costs, increased just 0.2% in June versus expectations of 0.4%, with the annual rate coming in at 4.7% against a forecast of 5.2%.
This softer inflation data followed a similarly encouraging Consumer Price Index (CPI) report a day earlier, leading market participants to scale back expectations for further monetary tightening. The odds of a rate hike by the Federal Reserve's September meeting dropped to 48%, down from nearly 70% just one week ago, according to CME FedWatch. The two-year U.S. Treasury yield fell 7 basis points to 4.12%, while the 10-year yield slipped to 4.58% from 4.61% before the release.
New York Federal Reserve President John Williams added to the dovish tone with a Wednesday morning speech in which he stated, "There are encouraging reasons to expect that inflation has peaked and should edge down in coming quarters." Williams projected overall inflation to decline to around 3.25% by year-end and then gradually approach the Fed's 2% target by 2028. His remarks were seen as a clear signal that the central bank is comfortable holding rates steady, and they helped push bitcoin past $65,000.
The Federal Reserve's Beige Book, released later in the afternoon, confirmed that price growth was stable or slower in all 12 districts compared with the prior reporting period. This narrative of disinflation, combined with the soft PPI and CPI readings, effectively removed any chance of a rate increase at the July meeting, according to analysts.
Bitcoin ETFs See Strong Inflows Amid Choppy July Flows
U.S. spot bitcoin exchange-traded funds (ETFs) attracted approximately $181 million in net inflows on Tuesday, rebounding from a heavy outflow day when funds shed roughly $425 million. Data from SoSoValue showed that BlackRock's IBIT led the charge, pulling in about $139 million, followed by Fidelity's FBTC with $21 million. No bitcoin fund reported outflows. On the ether side, spot ether ETFs added about $58 million, with BlackRock's ETHA accounting for the entire net figure. The inflows accompanied a roughly 4% gain in bitcoin ETFs and a 6% rise in ether funds, marking the strongest single-session moves in weeks.
Bitcoin ETF total assets climbed back to approximately $78 billion from about $75 billion, while ether ETF assets crossed $10 billion. July's flow pattern has been choppy, with inflows and outflows alternating nearly every other session. The $425 million redemption on July 13 was the largest single-day outflow of the month, while Tuesday's rebound represented the second-largest inflow. Neither direction has held for more than three consecutive days, reflecting ongoing uncertainty among investors.
AI Momentum Stocks Tumble; Crypto Gains as Speculative Capital Rotates
While bitcoin and ether rallied, the so-called AI momentum stocks continued to sell off sharply. Names such as Micron, SanDisk, Dell, Intel, and Marvell tumbled between 5% and 12% in early U.S. trading. The Dow Jones US Thematic Market Neutral Momentum Index, which tracks high-flying AI favorites, was heading for its worst month since December 2023, according to Bloomberg. In contrast, many of the "Magnificent Seven" stocks—Microsoft, Apple, Google, Meta, and Amazon—clawed back from recent underperformance, gaining 2% to 4%. Nvidia and Tesla posted only modest declines.
The rotation out of overvalued tech names appeared to benefit cryptocurrencies. At cycle lows in early July, bitcoin has risen about 10% so far this month, while ether has gained approximately 20%. Market makers noted that speculative capital may be returning to crypto after a period of severe underperformance relative to equities.
PayPal Surges on $53 Billion Stripe-Advent Bid; Michael Burry Calls Offer Too Low
Shares of PayPal soared more than 21% in premarket trading to $57.30 after Reuters reported that Stripe and Advent International had made a $53 billion acquisition offer, valuing the payments company at $60.50 per share—a 28% premium to Tuesday's close. The deal would combine two of the largest payments firms with growing exposure to stablecoins and blockchain-based settlement. PayPal's PYUSD stablecoin has a market capitalization of $2.8 billion. Reuters cited two people familiar with the transaction, saying the offer includes roughly $50 billion in committed bank financing, with Stripe and Advent holding equal stakes.
Investor Michael Burry, known for his bet against subprime mortgages, criticized the bid as too low. "The bid at 1.21X IV15 is simply too low," he wrote, referring to intrinsic value based on 15 times earnings. Burry argued a fair buyout price should be around $100 per share, rather than $60.50. He stated he would not sell and believes the offer is merely an opening bid.
Trump Talks Up Data Centers; Bitcoin Miners Rally
Former President Donald Trump posted on Truth Social that data centers are "one of the biggest Driving Forces in the Future for Jobs" and criticized New York Governor Kathy Hochul's executive action to halt construction of new data centers in the state. His comments gave a boost to former bitcoin miners that have pivoted to data center operations. Hut 8 led gains with a 5.2% advance, followed by CleanSpark (up 4%), IREN (up 3%), and TeraWulf (up 2.7%), the latter being most exposed to New York's political situation.
Wintermute Warns Against Chasing Bitcoin's Rally
Market maker Wintermute cautioned that bitcoin's rally above $65,000 faces a key technical hurdle, noting that $65,000 has repeatedly acted as resistance and that profit-taking has already emerged. The firm advised investors to watch Thursday's PCE inflation report, the end-of-quarter options expiry, and developments in the Iran conflict. It warned that one favorable inflation reading does not yet signal a lasting shift in market sentiment.
Other Notable Developments
U.S. Central Command completed strikes against Iranian coastal defense systems on Greater Tunb Island, but the news did not move markets significantly. The 10-year Treasury yield remained stable around 4.58%, and oil was flat.
Michael Saylor, Executive Chairman of Strategy, called BIP 110 a "harmful proposal," using the term "iatrogenic" to suggest the cure is worse than the disease. The tweet drew criticism from proponents like Matthew Kratter and Luke Dashjr.
The Depository Trust & Clearing Corp. (DTCC) went live with a tokenization trial, converting shares and Treasuries into digital tokens. Goldman Sachs, BlackRock, JPMorgan, and Vanguard are among nearly 40 traditional finance firms participating. Assets tokenized include Microsoft, Circle, Invesco's QQQ, State Street's SPDR SPY, and iShares' 0-3 Month Treasury Bond ETF.
Billionaire bitcoin bull Ricardo Salinas backed a new bitcoin-focused buyout firm called ORANGE JUICE, which raised $40 million. The firm aims to acquire stable, cash-flow-generating businesses with $1 million to $10 million in annual cash flow across various sectors, reinvesting cash into acquisitions or a bitcoin treasury.
Fed Chairman Kevin Warsh, in his second day of Congressional testimony, acknowledged that AI-related demand could cause price pressures but said it may not be inflationary and may not require a policy response. He expects a supply response that would ultimately be disinflationary.
In other corporate news, Elon Musk's Space X fell below its IPO price for the first time, trading at $133.35, down from a post-IPO high of $225. Anthropic is reportedly arranging investor meetings ahead of a potential IPO as soon as October, following Bloomberg's report. The AI startup is taking steps toward a public debut as demand for AI-related stocks continues.
Source:Coindesk News