Cryptocurrency prices rallied on Friday after data showed that US inflation cooled in June. The Consumer Price Index (CPI) rose 8.6% year-over-year, down from 8.6% in May. This was the first time in months that inflation had slowed, and it gave investors hope that the Federal Reserve may not need to raise interest rates as aggressively as previously thought.
Bitcoin, the world’s largest cryptocurrency, rose 7% to $29,500 on Friday. Ethereum, the second-largest cryptocurrency, rose 8% to $1,850. Other cryptocurrencies also rallied, with Solana up 10% and Cardano up 7%.
The rally in cryptocurrency prices was driven by the expectation that the Federal Reserve may be less aggressive in raising interest rates. Higher interest rates make it more expensive to borrow money, which can weigh on economic growth and cryptocurrency prices. However, the slower pace of inflation could give the Federal Reserve more leeway to pause or even slow the pace of interest rate hikes.
The rally in cryptocurrency prices is also being supported by growing institutional adoption. More and more institutional investors are buying cryptocurrencies, which is helping to legitimize the asset class. This institutional demand is helping to offset the selling pressure from retail investors who have been spooked by the recent volatility in the cryptocurrency market.
The slowing US inflation data has inspired hope for a crypto price rally. While cryptocurrencies like Bitcoin and Ether may experience short-term stability, the potential for a rally is backed by easing macroeconomic conditions. Investors will continue to monitor inflation trends and the actions of the Federal Reserve to make informed decisions about their crypto investments.