BITCOIN BREAKS $65K AS INFLATION COOLS
Markets extended their rally after another major inflation surprise reinforced the view that price pressures are easing faster than expected. Following yesterday’s cooler CPI report, June’s Producer Price Index (PPI) also came in below forecasts, boosting confidence that the Federal Reserve may not need to tighten policy further. As a result, markets aggressively repriced monetary policy expectations, with the probability of a July rate hike collapsing to just 4%, down from 34% just a day earlier.
Risk assets responded immediately. Bitcoin broke above $65K, Ethereum reclaimed $1.9K, U.S. equities pushed higher, and investors continued rotating back into growth assets. However, while inflation has turned into a tailwind for markets, the conflict in the Middle East remains unresolved, meaning oil prices could quickly become the next major driver of inflation expectations.
INFLATION NARRATIVE SHIFTS IN JUST ONE WEEK
Today’s Producer Price Index confirmed yesterday’s CPI wasn’t a one-off surprise. Headline PPI fell 0.3% MoM, well below expectations for no monthly change. Annual producer inflation slowed to 5.5%, beating forecasts of 6.2%, while Core PPI came in at 4.7% YoY, below the expected 5.2%.
At the same time, the New York Empire State Manufacturing Index surged to 15.6, its strongest reading in more than two years and well above expectations of 9.3. Together, the data suggests inflation is cooling while economic activity remains resilient, a combination markets typically view as supportive for risk assets.
However, much of June’s inflation relief was driven by oil prices falling below $70 during the month. With geopolitical tensions rising again and crude recovering sharply, higher energy prices could reverse some of today’s inflation progress in future CPI and PPI reports.
PEACE HOPES LIFT RISK SENTIMENT
Markets also received a boost after Trump said Iran had contacted him and “wants to make a deal,” renewing hopes that diplomatic negotiations could eventually ease tensions in the Middle East.
The comments helped push U.S. equities higher and reinforced today’s broader risk-on sentiment. While no agreement has been announced, markets welcomed the possibility that negotiations could eventually reduce geopolitical risks. If talks fail and the conflict escalates further, higher oil prices could once again become the dominant macro driver.
OIL REMAINS THE MARKET’S BIGGEST RISK
Despite improving inflation data, crude oil continues to trade near $80 as markets monitor developments surrounding the Middle East conflict.
The recent rally in oil highlights the market’s concern that any disruption to global energy supplies could quickly reverse the recent progress on inflation. While today’s economic data supported risk assets, sustained strength in crude could eventually reignite inflation pressures and challenge expectations for easier monetary policy.
SPY HOLDS GAINS AS BULLS TARGET NEW HIGHS
It continues to trade within a strong uptrend following back-to-back inflation surprises. On the 4-hour chart, SPY is trading around $753.73, holding above its 4H 50-period MA ($751.25), 100-period MA ($748.59) and 200-period MA ($745.52), confirming buyers remain in control.
Price is now approaching the $758.57 resistance level. A breakout above this area would expose the next upside targets near $762.99 and $767.95. On the downside, the $749.19 support level together with the 4H 100 MA remains the first key support zone. Holding above these levels keeps the broader bullish structure intact.
CRYPTO RALLY RETURNS
Risk appetite returned across the crypto market following another softer-than-expected inflation report, with nearly every major digital asset trading higher. The broad participation suggests today’s rally wasn’t driven by a handful of names but reflected improving sentiment across the entire crypto market as investors rotated back into risk assets.
SHORT LIQUIDATIONS FUEL THE BREAKOUT
Today’s rally forced another wave of bearish traders out of the market.
Over the past 24 hours, approximately 73,030 traders were liquidated, with total liquidations reaching $332.2 million.
Short positions accounted for $269.8 million, compared to just $62.4 million in long liquidations, highlighting that today’s move was largely driven by bears being forced to cover losing positions.
Ethereum led liquidations with $128.2 million, followed by Bitcoin at $98.0 million, reflecting the strength of today’s rally across the two largest cryptocurrencies.
BITCOIN BREAKS ABOVE KEY RESISTANCE
BTC extended its recovery after breaking above several key technical levels as improving macro conditions supported risk assets.
On the 4-hour chart, BTC is trading around $65,300. The breakout has also pushed it above the 0.236 Fibonacci level ($64,659), bringing the next resistance into focus at $65,555. A sustained move above this can take it towards $67,240.
On the downside, the reclaimed MAs between $62.4K-$63.5K now represent the first major support zone and help preserve the current bullish structure.
ETHEREUM RECLAIMS THE $1,900 LEVEL
ETH extended its recovery by reclaiming the important $1.9K psychological level. On the daily chart, ETH is trading around $1,932, holding above the Daily 50 MA ($1,749) and the 0.618 Fibonacci retracement ($1,839).
The next major resistance sits near $2,001, which aligns closely with the Daily 100 MA ($2,004). A breakout above this confluence would strengthen the bullish structure and expose the Daily 200 MA near $2,206. Holding above $1.9K is key.
HYPE APPROACHES A KEY BREAKOUT
It continues to show strength after reclaiming all three major 4-hour MAs, with price now testing $69.08.
A breakout above this resistance could trigger another leg higher toward the $72-$73 region, while the reclaimed MAs between $66.5-$67.3 now provide strong support.
PUMP RALLIES DESPITE AN $86M TOKEN UNLOCK
It gained nearly 12% even after the project completed its first team and investor token unlock. Approximately 57.3 billion PUMP tokens, worth $86.5 million, were distributed as the project’s one-year lockup expired.
Despite the additional supply entering circulation, buyers absorbed the unlock, highlighting the strength of today’s broader risk-on environment. Technically, PUMP has reclaimed both its Daily 50 MA and is testing the Daily 100 MA, with a breakout opening the door toward the Daily 200 MA.
MARKET SENTIMENT CONTINUES TO IMPROVE
Investor confidence continues recovering after two consecutive inflation surprises. The Crypto Fear & Greed Index has climbed to 36, up from 34 yesterday, 26 last week, and 25 a month ago.
Only weeks ago, sentiment had fallen to 5, marking Extreme Fear and one of the weakest readings of the year..
WHAT TO WATCH NEXT
- Can Bitcoin break above $65.5K and target $67.2K?
- Will Ethereum reclaim the $2,000 level?
- Can SPY break through $758.57?
- Will diplomatic talks between the U.S. and Iran gain traction?
- Can oil remain contained despite ongoing geopolitical tensions?
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