Key Takeaways:
Bitcoin enters a high-risk week as Fed Governor Christopher Waller's warning on inflation pushes rate-hike odds to 41%, with US inflation data set to determine the next leg lower.
Bitcoin faced renewed selling pressure after Fed Governor Christopher Waller warned of persistent inflation on July 13, pushing fed funds futures to price in a 41% chance of a July rate hike, according to the CME FedWatch Tool.
"Waller's comments reinforce the narrative that the Fed's final mile on inflation is proving the hardest," said Nina Volkov, macro analyst at Edgen. "For Bitcoin, that means liquidity conditions are tightening just as the market faces a key inflation print."
Fed funds futures now show a near-even split, with 59% of traders betting on a pause and 41% anticipating a quarter-point hike at the Fed's July meeting, per the CME FedWatch Tool. The shift follows Waller's warning that the US central bank may need to keep rates higher for longer if inflation does not continue to moderate. Gold prices also declined on the news, while the US dollar strengthened against major peers, with the euro slipping toward $1.1400, according to FXStreet data.
The upcoming US inflation data will be the next catalyst for Bitcoin's direction. A hot print could accelerate selling, potentially driving BTC below key support levels, while a softer reading may fuel a relief rally. The July Fed meeting now looms as the next major inflection point for risk assets.
The macro headwinds come as Bitcoin already faces a challenging technical setup. The cryptocurrency has been range-bound in recent weeks, with traders closely watching the interplay between Fed policy expectations and broader risk appetite. The simultaneous decline in gold — traditionally a haven asset — underscores the breadth of the dollar-driven selloff, with the US Dollar Index gaining as rate-hike bets intensified.
The US-Iran geopolitical backdrop adds another layer of complexity. Renewed strikes between the two nations have boosted the dollar on safe-haven flows, further pressuring Bitcoin and other risk assets that tend to weaken when the greenback strengthens.
For Bitcoin, the key question is whether the current selloff is a positioning-driven correction or the start of a deeper drawdown. The CME FedWatch data suggests the market is bracing for either outcome, with the 41% hike probability leaving little room for error if inflation prints hot.
This article is for informational purposes only and does not constitute investment advice.
