The crypto market moved higher today, with its total value rising above $2 trillion as investors reduced their expectations for another Federal Reserve interest rate increase.
The rally followed the release of softer-than-expected U.S. Producer Price Index data, which suggested that inflationary pressures continued to ease in June.
Crypto Market Rallies Following PPI Report
The total cryptocurrency market capitalization increased by more than 2%, reaching approximately $2.3 trillion during the session.
Bitcoin climbed above the important $65,000 level, while Ethereum rose past $1,900 for the first time since early June. ETH also recorded gains of more than 2% during the day.
The positive market reaction followed the publication of the latest U.S. producer inflation figures.
According to data from the Bureau of Labor Statistics, headline PPI declined by 5.5% year over year in June. This was below market expectations of 6.2%.
Producer prices also fell by 0.3% on a monthly basis, marking the largest monthly decline since April 2025.
Core Inflation Also Comes in Below Forecasts
Core PPI, which excludes more volatile categories, increased by 4.7% year over year. Analysts had expected a reading of 5.1%.
On a monthly basis, core producer prices rose by 0.2%, slightly below the forecast of 0.3%.
The weaker inflation figures were viewed positively by crypto investors because slower price growth may reduce the need for the Federal Reserve to raise interest rates.
The PPI report followed softer Consumer Price Index data released one day earlier. Bitcoin and the wider crypto market had already responded positively to that report.
June CPI recorded its largest monthly decline since April 2020, further supporting expectations that inflation may be cooling.
Fed Rate Hike Expectations Decline
Expectations for a Federal Reserve rate increase fell again after the PPI report.
CME FedWatch data showed that the probability of a rate hike at the July 29 Federal Open Market Committee meeting had dropped to 12.3%.
That figure was lower than approximately 16% one day earlier and significantly below the recent peak of more than 30% recorded during the previous week.
As a result, financial markets were no longer fully pricing in a July interest rate increase.
Crypto Traders See Low Chance of July Rate Hike
Participants in crypto prediction markets were even more doubtful that the Federal Reserve would raise rates at its July meeting.
Polymarket traders assigned only a 4% probability to a rate increase during the upcoming meeting.
The estimated likelihood of at least one Fed rate hike before the end of the year also declined. The probability fell to approximately 51%, compared with 55% one day earlier and a recent high of 71%.
Federal Reserve Remains Cautious
Despite the encouraging inflation figures, Federal Reserve Chair Kevin Warsh warned that the central bank’s fight against inflation was not yet complete.
During a House hearing, Warsh said that one positive CPI report did not mean policymakers had achieved their objective. He stressed that additional progress would be required to return inflation to the Federal Reserve’s 2% target.
For now, softer inflation data and falling rate hike expectations have improved sentiment across Bitcoin, Ethereum and the broader crypto market.
