Svmuu News: The crypto market continues to stabilize, with the Bitcoin rising nearly 7% in the week ending July 5, marking its strongest weekly performance since March. This rally was primarily driven by a decline in inflation expectations.Breakeven inflation rates, which measure market inflation expectations, have recently declined significantly; the two-year benchmark has fallen below 2%, approaching the Federal Reserve inflation target, while long-term inflation expectations have also weakened.Meanwhile, WTI crude oil prices have fallen in tandem with inflation expectations, dropping to levels similar to those seen before the geopolitical conflict in February, prompting the market to reassess inflationary pressures, expectations for interest rate cuts, and the direction of the U.S. dollar.
Some analysts believe that if the U.S. Dollar Index (DXY) weakens, it will further reduce resistance to a rise in Bitcoin, as the two are typically negatively correlated. However, others caution that inflation in the services sector remains sticky, and falling oil prices do not necessarily signal a reversal in the overall inflation trend; monetary policy may continue to maintain a “higher for longer” stance.
The next key market milestone is the release of the U.S. June CPI data on July 14, which could serve as a major catalyst for assessing the path of inflation and the direction of risk assets. (CoinDesk)