Here’s a fresh, concise rewrite with a slightly sharper tone:
Major cryptocurrencies fell by more than 2% over the past 24 hours as traders significantly raised expectations of a July Federal Reserve rate hike.
The crypto market is under pressure as investors increasingly price in the possibility of tighter monetary policy, with the shift coming just ahead of key U.S. inflation data and congressional testimony from Fed Chair Kevin Warsh.
Bitcoin declined over 2% to roughly $62,380, while Ether, XRP, and other leading tokens recorded similar losses, according to CoinDesk data.
Market-implied odds of a July rate hike have surged to around 50%, up from about 10% just days ago, per Bloomberg. The jump follows comments from Fed Governor Christopher Waller indicating that further rate increases may be needed to rein in inflation.
The repricing has also hit bond markets, sending the two-year U.S. Treasury yield to 4.29%—its highest since early last year. This segment of the yield curve is especially responsive to changes in near-term rate expectations.
A more hawkish outlook has been reinforced by rising geopolitical tensions between the U.S. and Iran, along with a sharp increase in oil prices. President Donald Trump reinstated a blockade on Iranian vessels moving through the Strait of Hormuz and imposed a 20% fee on other cargo passing through the route.
Consequently, West Texas Intermediate crude has climbed to nearly $80 per barrel from $67 at the beginning of the month, fueling renewed inflation concerns.
Focus shifts to CPI and Warsh testimony
Investors are now awaiting the June consumer price index report, scheduled for release Tuesday morning by the Labor Department.
Economists polled by Bloomberg expect headline inflation to dip below a 4% annual rate, with the report likely to show the first decline in both headline and core inflation since January, following May readings of 4.2% and 2.9%.
However, even if the data meets expectations, it may be seen as outdated given the recent surge in oil prices. If inflation proves more persistent, it could intensify concerns over the Fed’s policy trajectory.
Attention will then turn to Kevin Warsh’s testimony before Congress. With the Fed typically offering limited forward guidance, markets will be closely watching for any hints on future rate decisions and inflation trends.
Analysts at ING suggest Warsh could point to subdued inflation expectations as a reason to hold rates steady. They also note that even if a rate hike materializes, it could eventually be reversed, with markets still anticipating deeper cuts over the longer term.
