The latest US inflation report delivered a dramatic shake-up to the digital asset market on Tuesday. June's Consumer Price Index (CPI) fell 0.4% month-over-month, its steepest decline since April 2020, while annual inflation slowed to 3.5% and core inflation dropped to 2.6% — all below consensus forecasts. The immediate result was a massive short squeeze across crypto exchanges, with short liquidations outpacing long liquidations by an extraordinary 1,810% margin.
According to data from CoinGlass, short sellers lost $134.90 million in the first hour following the release, while long positions suffered just $7.06 million in losses. Over the past 24 hours, total liquidations reached $413.37 million across 89,498 traders. Ethereum rather than Bitcoin absorbed the hardest blow: ETH short liquidations hit $56.71 million in one hour, compared to $41.14 million for BTC shorts. The largest single liquidation was a $6.37 million ETHUSDT position on Binance.
Bitcoin surged past $63,000 within minutes and traded near $64,000 later in the day. Analysts from 21Shares described the CPI print as "the push we need" to break $64,000 and target $66,000, with a potential retest of $70,000–$75,000 by month's end if geopolitical tensions eased. Sygnum's CIO called it the first real sign that spring's energy-driven inflation impulse is fading, while cautioning that one month of data won't shift the Fed's stance. Wintermute noted that the market had already held a $62,000 support level through repeated airstrikes on Iran and a closure of the Strait of Hormuz.
The sharp disinflation through energy gave fresh hope for a Federal Reserve rate cut as early as autumn. Rate-hike probabilities collapsed, with markets now pricing a softer monetary backdrop that could boost liquidity and risk assets. Wintermute pointed to a recovery level at $67,250; Bitfinex highlighted that the Fed on an extended hold removes the policy-rate risk that previously weighed on bitcoin. However, desks emphasised caution, noting that Chair Warsh's data-dependent Fed would require confirmation from upcoming producer price data before any policy shift.
