Bitcoin’s path to $70K tied to gasoline prices, Fed views

Bitcoin briefly cleared $60,000 and moved toward $64,000 after U.S. labor data for June showed payrolls rose by 57,000, the unemployment rate increased to 4.2% and labor-force participation slipped to 61.5%. The dollar index fell 0.56% to 100.83 and market odds for a September Federal Reserve rate increase dropped from about 67% to about 54%.

Energy markets have retreated from levels seen during the Iran-related disruption. Brent crude traded near $72.19 a barrel and U.S. WTI near $68.81 after exports through the Strait of Hormuz resumed, Saudi Arabia reduced its official selling prices and OPEC+ raised output targets. Market stocks remain low after more than a billion barrels of spare supply were drawn during the disruption. The Energy Information Administration reported refineries operating at 96.6% capacity and producing roughly 10 million barrels of gasoline per day, while total gasoline inventories fell by 2.3 million barrels and are about 7% below the five-year seasonal average.

Gasoline prices remain elevated compared with crude. A normalized comparison of RBOB gasoline futures and WTI crude shows gasoline futures trading about 40% above pre-war levels. The Bureau of Labor Statistics’ May consumer price index showed gasoline prices rose 7% in the month and were 40.5% higher year over year. The New York Federal Reserve’s Global Supply Chain Pressure Index eased to 1.25 in June from 1.81 as Middle East disruption faded, but it remains above the level recorded before the Iran conflict began.

Policymakers are assessing how much of the recent energy shock is temporary. Philip Lane, chief economist at the European Central Bank, said a U.S.-Iran agreement pushed oil prices closer to the ECB’s baseline forecast and that the retreat in crude eased the urgency for another ECB policy increase, while ECB officials cautioned that the energy shock has not fully worked through the system. At its June meeting, the Federal Reserve left the target range for the federal funds rate at 3.50% to 3.75% and restated that inflation remains above its 2% goal. San Francisco Fed President Mary Daly described policy as “slightly restrictive” and said the next move is not decided.

Market strategists and asset managers are using the July 14 CPI release as a first clear test of whether the May gasoline spike has peaked. Citi lowered its 12-month Bitcoin price target to $82,000 from $112,000 and reduced its expected net ETF inflows to zero from $10 billion, citing about $3.3 billion of ETF outflows so far this year. Citi outlined a downside scenario in which Bitcoin falls to $53,000 if the economy cools, ETF outflows continue and inflation risks reassert.

Analysts describe three possible CPI outcomes for July 14: gasoline prices cooling and CPI softening; crude calm but gasoline remaining elevated; or gasoline pass-through keeping CPI high. Investors are watching pump prices and the July CPI release for data on gasoline pass-through to consumer inflation and for further signals from central banks. Stephen Coltman, head of macro at 21Shares, cautioned that the rally in assets such as precious metals, the dollar and Bitcoin will only be durable if policymakers conclude policy settings are sufficient to bring inflation back to 2% without further tightening.