US President Donald Trump told reporters he "loves" inflation on Wednesday after government data showed consumer prices rising at the fastest annual pace in three years. The Consumer Price Index (CPI) climbed 4.2% from a year earlier, with inflation rising 0.5% in May after a 0.6% jump in April, according to the Bureau of Labor Statistics. When asked about the latest inflation numbers, Trump embraced them, saying "The numbers were great...I love the inflation." Energy prices drove most of the increase, with gasoline now averaging $4.15 per gallon compared to an average of $2.98 when the US and Israel first struck Iran on February 28. Meanwhile, real wages fell 0.1% in May, marking a second straight month of declines, as reported by BeInCrypto Markets.
Bitcoin traders have positioned for a Federal Reserve pause next week, with CME FedWatch data showing a 98.4% probability that policymakers will leave interest rates unchanged at the June 17 meeting. According to the latest data, markets are assigning only a 1.8% chance of a rate cut and no meaningful probability of a rate increase, leaving investors focused less on the decision itself and more on what Federal Reserve officials signal about the path ahead. The cautious positioning has coincided with weakness across digital assets, with crypto market data showing total market capitalization falling 2.47% over the past 24 hours to roughly $2.13 trillion, while Bitcoin has also retreated as traders reduce risk exposure before the Fed decision. Polymarket traders are even more certain, with the "no change" outcome commanding a 99.3% implied probability, supported by $72.1 million in total trading volume flowing into the event. The 50-plus-basis-point decrease bracket drew the highest individual volume at $17.2 million, suggesting some traders are hedging longer-tail scenarios despite the lopsided consensus.
Bitcoin's bounce off last week's lows is rolling over, with BTC trading near $62,000, down almost 24% over the past 30 days, according to BeInCrypto Markets. The latest crypto pullback appears driven by a short squeeze rather than fresh buying, as more than $500 million in bearish bets were liquidated in the highest such figures since April. Ether fell 3.4% to $1,625, Solana dropped 4.1% to $64.24, XRP lost 4.3% to $1.12, while BNB and Dogecoin each slid less than 3%. Hyperliquid's HYPE was the worst performer, down 10.2% on the day and 21.3% on the week to $55.52. Gold also fell 2% to below $4,200 an ounce, as both non-yielding assets lose appeal when traders bet on higher rates. The market is betting on higher interest rates punishing anything that doesn't pay one, weighing on crypto and gold markets simultaneously. Bitcoin now sits roughly 51% below its all-time high of over $126,000, with a 1% bounce over the past day doing little to repair the broader downtrend.
Attention has increasingly turned to the first Federal Open Market Committee meeting chaired by Kevin Warsh, who will oversee both the rate announcement and the release of updated economic projections. The June 17 meeting is particularly high-stakes because it includes the Summary of Economic Projections, also known as the dot plot, which outlines where policymakers expect interest rates to move in the coming years. According to a Reuters survey conducted between June 4 and June 9, 72 of 102 economists expect the federal funds rate to remain within the current 3.50% to 3.75% range through the end of 2026, representing the strongest consensus so far this year against additional rate cuts. Warsh officially leads the Federal Open Market Committee for the first time at this month's meeting, having been confirmed in a narrow 54-45 Senate vote on May 13, 2026, and sworn in on May 22, replacing Jerome Powell whose term ended in mid-May. Reuters noted that stronger-than-expected economic data and ongoing inflation concerns have reduced expectations that the central bank will ease policy in the coming months.
Despite the recent price movements, institutional demand remains cautious with U.S. spot bitcoin ETF assets falling to $77.58 billion, back to levels seen just after Donald Trump's November 2024 election victory despite a far more favorable regulatory climate. According to Diana Pires, chief business officer at sFOX, "Buyers have stepped in after the move lower, but spot demand has yet to return in a meaningful way." When new demand isn't broad enough to cover the selling, rallies struggle to hold. The 10-year Treasury yield rose to 4.54%, while Brent crude traded near $92 a barrel as renewed U.S. strikes on Iran kept a bid under oil. Market participants are preparing for Wednesday's U.S. inflation report and its implications for Federal Reserve policy, as a hotter reading could keep rates elevated, pressure risk assets further and weaken bitcoin's case as a macro hedge if gold stabilizes while it continues to slide. Markets now price more than 70% odds of a rate hike by the end of 2026, which could strengthen Bitcoin's macro headwinds into the summer.
