Bitcoin (BTC) investors received what should have been welcome economic news Wednesday, as the government reported a big slowdown in U.S. inflation, yet the cryptocurrency’s price quickly dropped below $30,500. The Consumer Price Index (CPI) data showed consumer prices increased 3% year-over-year in June, versus the 4% gain in May, and the core rate—which excludes food and energy prices—slowed to a 4.8% increase.
Though the fading inflation risks should have been supportive of Bitcoin, the cryptocurrency’s price dropped due to a few issues. Firstly, the U.S. Federal Reserve may not be swayed by the CPI print, as it was in 2021 when it believed inflation was a temporary blip. Secondly, the selling pressure of 9,825 Bitcoin ($301 million) from two wallets labeled as belonging to the U.S. government may have balanced out any good inflation news. Lastly, markets may have anticipated the improved June inflation report, leading to the 20% rise in Bitcoin’s price since mid-June.
Despite the drop in Bitcoin’s price, traditional markets appear to have fully embraced the weaker inflation report. The dollar index is off more than 1%, the 10-year Treasury yield is down 13 basis points (0.13%) to 3.84%, and the two-year yield is down the same amount to 4.74%. The Nasdaq and S&P 500 are both ahead by about 1% and hitting new all-time highs.