Bitcoin Under Pressure as US Inflation and Trade Developments Sap Market Confidence
While XRP responded to Ripple’s announcement, US inflation data and tariff developments influenced demand for bitcoin (BTC). The US Core PCE Price Index rose 2.7% year-on-year in May, up from 2.6% in April, tempering bets on a Q3 Fed rate cut. According to the CME FedWatch Tool, the probability of a September Fed rate cut dipped from 93.2% to 92.5%.
Friday’s data could reflect the early effects of tariffs on inflation, supporting Fed Chair Powell’s call for a wait-and-see policy stance.
However, unexpected falls in personal income and spending limited the impact of the inflation figures on Fed rate cut bets. Personal income fell 0.4% month-on-month in May vs. a 0.7% rise in April, while personal spending slipped 0.1% (April: +0.2%). Falling income and spending could signal a softer inflation outlook, supporting a more dovish Fed rate path.
News of US President Trump ending all trade talks with Canada impacted risk sentiment. On June 27, Trump announced:
“(Canada) has just announced that they are putting a Digital Services Tax on our American Technology Companies, which is a direct and blatant attack on our Country. They are obviously copying the European Union, which has done the same thing, and is currently under discussion with us, also. Based on this egregious Tax, we are hereby terminating ALL discussions on Trade with Canada, effective immediately.”
Trump also stated that he would announce tariffs on Canadian goods within the next seven days. An escalation in trade tensions previously dragged BTC from a record high of $111,917 to a pre-Middle East conflict low of $100,424.
Despite the market headwinds, US bitcoin-spot ETF flow trends continued driving BTC higher. According to Farside Investors, key inflows for June 27 included:
With BlackRock’s (BLK) iShares Bitcoin Trust (IBIT) flow data pending, total US BTC-spot ETF inflows reached $344.5 million. Notably, the US BTC-spot ETF market may extend its net inflow streak to 14 sessions.
The launch of the BTC-spot ETF market has been pivotal in smoothing BTC’s price volatility and boosting demand from mainstream corporations.
Bloomberg Intelligence Senior ETF Analyst Eric Balchunas remarked:
“Speaking of bitcoin’s volatility, here’s a chart showing the ratio of IBIT’s 60-Day volatility to SPX. It was 5.7x more volatile a year ago, now it’s barely over 1 (meaning about same vol as US stocks).”
BTC gained 0.15% on June 27, partially reversing Thursday’s 0.39% loss to close at $107,130.
The near-term price trajectory depends on several key drivers, including Fed rate cut signals, trade headlines, Iran and Israel upholding the ceasefire, and ETF flows.
