Bitcoin Sinks on In-Line Inflation Report as Fed Rate Hike Odds Ease

Bitcoin's price dropped to nearly $63,500 on Thursday, a decline of over half a percent in a day and almost 2% for the week. The cryptocurrency market was largely unphased by the U.S. inflation report, which came in line with economists' expectations.

The July numbers showed headline inflation rose 0.1% month-over-month and 3.4% year-over-year, while the core measure that strips out food and energy increased by 0.2% to 2.5%. This led to a slight reduction in the odds of a Federal Reserve rate hike in September, which futures markets trimmed to about 38% from 46% before the release.

Gabe Selby, head of research at CF Benchmarks, noted that bitcoin tends to move most when inflation data forces a rethink on interest rates. He pointed out that an in-line report can remove a tail risk, but it takes a genuine surprise to create a catalyst for significant price movement.