Market analysts have cautioned that Bitcoin and gold may face further headwinds this year following a 4.2% annual increase in the US Consumer Price Index (CPI) in May, according to figures released on Wednesday.
The surge in the consumer price index, a broad gauge of goods and services costs across the US economy, deflated hopes that the central bank will reduce rates, with some analysts now expecting rate hikes later this year — bad news for riskier assets such as crypto.
US inflation surges to a three-year high. Source: Trading Economics
Bitcoin has already had a troubling first half of the year. Bitcoin prices have fallen 36% since January, while gold is down 23% from its January peak. At the same time, crude oil prices have surged more than 50% over the same period.
“Institutional investors will likely want to see further evidence that inflation is moving sustainably lower before increasing exposure. At the same time, the escalating conflict involving Iran introduces additional uncertainty, particularly given the risk of ongoing oil supply disruptions.”
Thielen predicted that these disruptions could become “more pronounced” during the summer months, “placing renewed upward pressure on inflation expectations.”
Bitcoin “remains vulnerable,” he said, predicting that a break below $60,000 appears “increasingly likely” over the coming days.
Rates have been unchanged since December 2025. Source: Trading Economics
Risk appetite will return only when inflation drops
HashKey Group senior researcher Tim Sun said that while rate hike expectations are “heating up,” the probability of the Fed raising interest rates this year is “relatively low.”
“Only when inflation drops, rate cuts become viable, and liquidity improves alongside lower capital costs, will the overall risk appetite truly reverse.”
CME futures predict a 98.4% probability that there will be no change in rates at the Fed’s next meeting on June 17.
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