Bitcoin Drops Ahead of CPI Release and Warsh Testimony

June consumer price index data is scheduled for release at 8:30 a.m. ET. Economists expect headline CPI to slow to about 3.8% year over year from May’s 4.2%, with the monthly reading forecast to decline roughly 0.1% to 0.2%.

Much of the expected headline improvement stems from lower gasoline prices in June. U.S. pump prices fell about 10% that month, a drop Douglas Porter, BMO’s chief economist, called “the fourth-largest monthly decline in a decade.” Gasoline fell after the Strait of Hormuz briefly reopened during a ceasefire between Washington and Tehran.

Core CPI, which excludes food and energy, is projected between 2.8% and 2.9% year over year, near May’s 2.9%. The Cleveland Fed’s nowcast puts core at 2.85%. The divergence between a lower headline print driven by energy and a flatter core reading is a key focus for markets.

Ninety minutes after the CPI release, Fed Chair Kevin Warsh will testify before the House Financial Services Committee. Since taking office, Warsh shortened the FOMC statement, removed explicit forward guidance and declined to publish a personal dot on the policy outlook. Market participants expect his answers under questioning to provide more context on how the Fed views recent data.

Oil prices rose after disruptions resumed in the Strait of Hormuz. Over the weekend, the White House reinstated a blockade on Iranian shipping and announced a 20% fee on other cargo passing through the waterway. Brent crude rose from the low $60s at the start of the month to above $87 on Tuesday. West Texas Intermediate settled at $78.14 on Monday. Those moves pushed Treasury yields higher, with the two-year trading near 4.28% and the 10-year above 4.6% ahead of the CPI release.

Money markets raised the odds of a July rate increase to roughly 40% to 50%, up from about 10% earlier last week. Fed Governor Christopher Waller publicly warned the central bank may need to raise rates if core inflation runs hot.

Bitcoin traded near $62,200 on Tuesday, down about 3% over 24 hours after a Monday range between roughly $64,273 and $61,794. U.S. spot Bitcoin ETFs recorded net outflows of $424.7 million on Monday. Market participants cited $64,000 and $61,700 as immediate reference points and $60,000 as the next major support level if those give way.

At the Fed’s June 17 meeting the committee held the target range at 3.50% to 3.75% in a 12-0 vote; the median projection shifted to favor a hike and 17 of 18 officials judged inflation risks to the upside. Minutes from that meeting showed some participants argued for raising rates even as the formal decision was to pause. The June CPI report will not capture any further price effects from renewed disruptions in the Strait of Hormuz in July; lawmakers and investors will watch Warsh’s testimony for guidance on how the Fed weighs the June data against more recent energy market developments.