Cryptocurrency Market Reacts to US Inflation Data and US-China Trade Deal

The cryptocurrency market showed mixed performance on Wednesday following the release of US inflation data for May and news of a trade agreement between the United States and China. Bitcoin remained relatively stable, while Ethereum and several altcoins experienced positive movement.

• US CPI Inflation: The US Consumer Price Index (CPI) for May rose to 2.4%, slightly below the expected 2.5%.
• US-China Trade Deal: President Donald Trump announced that the US and China have reached a trade agreement, with existing tariffs remaining unchanged.
• Cryptocurrency Performance: Bitcoin held steady around $109,000, while Ethereum and various altcoins saw gains following the announcements.

Mixed Performance After CPI and Trade Deal News

The US Bureau of Labor Statistics (BLS) released the May CPI inflation data, revealing that both the headline CPI and core CPI increased by 0.1% month-over-month, falling short of estimates of 0.2% and 0.3%, respectively.

The annual headline CPI rose to 2.4% from 2.3% the previous month but missed expectations of 2.5%. Core CPI also increased to 2.8% in May, below the anticipated 2.9%, although it matched April’s increase. This inflation data could influence the Federal Reserve’s decision next week, with traders already anticipating a rate cut in September.

Monetary policymakers have generally adopted a wait-and-see approach regarding the economic outlook.

President Trump has reiterated his call for the Fed to cut rates by 100 basis points, emphasizing the importance of such a decision.

“CPI just out. Great numbers! Fed should drop rate a full point. Would save paying off debt at much less interest. So important,” Trump stated on Truth Social.

Trump also announced that the US and China reached a trade agreement after delegations from both countries met in London on Monday and Tuesday.

He shared that the “deal with China is done, subject to final approval by President Xi and myself.” He also affirmed his commitment to working closely with President Xi Jinping to “open China to trade with America.”

Under the agreement, the US will maintain a 55% tariff on Chinese goods, while China will continue its 10% tax on US trade. The 55% tariff includes a 30% tax implemented earlier this year, along with pre-existing duties of 25%.

The cryptocurrency market saw modest gains following these developments, with Bitcoin briefly surpassing $110,000 before settling at $108,700 at the time of reporting. Despite Bitcoin trading near its all-time high, market sentiment remains cautious.

Bitcoin funding rates suggest that traders are maintaining a defensive stance, with the average funding rate hovering around 1.3% annualized over the past week. This level has been observed near local lows in the past two and a half years.

“Historically, BTC does not peak in environments with negative funding; such conditions tend to precede rallies rather than mark peaks. This suggests that the current risk aversion may set the stage for a further increase,” wrote Vetle Lunde, head of research at K33.

Major altcoins such as Ethereum (ETH), Solana (SOL), and Dogecoin (DOGE) have sustained positive momentum since Tuesday, with gains of 2.5%, 3%, and 2%, respectively, in the last 24 hours.

Among token categories, decentralized finance (DeFi), artificial intelligence (AI), and meme coins have risen by 5.2%, 5%, and 2%, respectively.

Stay ahead of the curve in the fast-paced crypto world – explore the latest updates and trends at Cryptonewsfeeds.com.