May CPI rise to a three-year high dims Fed rate-cut hopes, weighing on non-yielding assets like Bitcoin and gold.
US consumer prices rose 4.2% year-over-year in May, the highest level in three years, according to government data released Wednesday. The print dashed expectations for near-term Federal Reserve rate cuts and prompted some analysts to warn of potential hikes later this year.
Bitcoin has dropped 36% since January, while gold has fallen 23% from its peak. Crude oil, by contrast, has climbed more than 50% over the same period. Analysts noted that the Fed’s cautious stance keeps liquidity expectations capped, pressuring risk assets.
Markets now see a higher-for-longer rate environment, reducing the appeal of non-yielding stores of value like Bitcoin and gold.