Bitcoin moved higher on Wednesday and briefly reached its strongest level in three weeks. Softer-than-expected US inflation data reduced concerns about an immediate Federal Reserve interest rate increase.
However, further gains across the cryptocurrency market remained limited. Investors continued to monitor the escalating conflict between the United States and Iran, with neither side showing clear signs of de-escalation.
Bitcoin Price Climbs Toward $65,000
Bitcoin rose by approximately 3.7% to $64,938 during early trading.
The cryptocurrency briefly reached an intraday high of $65,055, its highest price since June 22.
The move extended Bitcoin’s recovery from the previous session as traders responded positively to weaker US inflation figures.
Still, Bitcoin struggled to build stronger momentum above the $65,000 level due to geopolitical uncertainty and concerns about the longer-term interest rate outlook.
Softer US Inflation Supports Bitcoin
Bitcoin’s latest advance followed the release of weaker-than-expected US Consumer Price Index data.
The report reduced expectations that the Federal Reserve would raise interest rates in the near term.
Higher borrowing costs have weighed heavily on cryptocurrencies and other speculative assets in recent weeks. Since Bitcoin does not generate interest, rising government bond yields can make traditional fixed-income investments more attractive.
As a result, lower interest rate expectations generally provide support for Bitcoin and the broader crypto market.
Federal Reserve Risks Have Not Disappeared
Although the softer inflation report improved sentiment, investors remained cautious about the Federal Reserve’s longer-term policy direction.
Federal Reserve Chair Kevin Warsh used his first congressional testimony to reaffirm the central bank’s commitment to its 2% annual inflation target.
His remarks, together with recent hawkish comments from other Fed officials, suggested that policymakers still retain a bias toward tighter monetary policy.
If inflation begins to accelerate again, expectations of additional rate increases could quickly return.
Higher Oil Prices Could Revive Inflation
The conflict in the Middle East has increased concerns about disruptions to global oil supplies.
A sustained rise in energy prices could lift transportation, production and consumer costs. This would make it more difficult for the Federal Reserve to bring inflation back toward its target.
Therefore, the relationship between oil prices, inflation and monetary policy remains an important factor for Bitcoin traders.
Renewed inflation pressure could push bond yields higher and reduce demand for risk-sensitive assets, including cryptocurrencies.
US-Iran Conflict Continues to Escalate
The United States and Iran exchanged further military strikes during the early hours of Wednesday.
US President Donald Trump said his administration had communicated with Iran on Tuesday. However, he warned that American attacks could continue or intensify until an agreement is reached.
Iran responded with missile and drone attacks targeting several Gulf countries that host US military bases.
Tehran also continued attacks on commercial vessels travelling through the Strait of Hormuz. Iranian officials warned that other important shipping routes in the region could also face disruption.
Strait of Hormuz Risks Pressure Global Markets
The Strait of Hormuz is one of the world’s most important energy transportation routes.
Continued attacks on commercial shipping have raised concerns about oil supply shortages and higher freight costs.
These developments pushed oil prices sharply higher and increased volatility across global financial markets.
For cryptocurrency investors, the conflict creates competing forces. Bitcoin may attract some demand as an alternative asset, but rising inflation and interest rate expectations could limit its upside.
Altcoins Follow Bitcoin Higher
The broader cryptocurrency market also recovered on Wednesday.
Ether, the world’s second-largest cryptocurrency, rose by approximately 5.8% to $1,886.86.
XRP gained around 3.8% to reach $1.1101.
Solana climbed by 4.4%, while Cardano advanced by 3.6%. BNB also moved higher, adding approximately 2%.
Among major memecoins, Dogecoin gained around 3%, while the TRUMP token increased by 2.3%.
Crypto Market Still Faces Wider Challenges
Despite Wednesday’s rebound, many cryptocurrencies remained significantly lower for the year.
Institutional and retail interest in the sector has weakened, limiting the strength of recent recoveries.
Investors have also redirected capital toward artificial intelligence stocks, which have attracted increasing attention and stronger momentum.
For now, Bitcoin’s outlook remains closely tied to US inflation data, Federal Reserve policy and developments in the Middle East.
A sustained move above $65,000 could improve market sentiment. However, renewed inflation pressure or further geopolitical escalation could prevent the recovery from gaining momentum.
