Bitcoin and Gold Face Headwinds as US Inflation Hits 3-Year High

Market analysts have cautioned that Bitcoin and gold may face further headwinds this year following a 4.2% annual increase in the US Consumer Price Index (CPI) in May, according to figures released on Wednesday.

The surge in the consumer price index, a broad gauge of goods and services costs across the US economy, deflated hopes that the central bank will reduce rates, with some analysts now expecting rate hikes later this year — bad news for riskier assets such as crypto. US inflation surges to a three-year high. Source: Trading Economics

Bitcoin has already had a troubling first half of the year. Bitcoin prices have fallen 36% since January, while gold is down 23% from its January peak. At the same time, crude oil prices have surged more than 50% over the same period.

“Today’s in-line CPI print keeps the Fed cautious, data-dependent, and in no rush to cut,” Iggy Ioppe, chief investment officer at institutional trading firm Theo, told Cointelegraph.

CPI tracks changes over time in the prices of a basket of goods and services typically bought by consumers and is one of the Federal Reserve’s key data points for monetary policy decisions.

“For Bitcoin, an in-line print is unlikely to be a clean catalyst either way,” he added. “It keeps liquidity expectations capped and risk assets trading more on positioning than on a fresh dovish impulse.”

Ioppe also said that gold remains under pressure. “Real yields are still the key variable, and without imminent cuts, the opportunity cost of holding a non-yielding asset stays elevated,” he said.

No institutional reallocation to Bitcoin

Markus Thielen of 10x Research told Cointelegraph he sees the current macro environment as a continued headwind for Bitcoin.

“We do not believe this data is sufficiently encouraging to prompt Wall Street investors to meaningfully reallocate into Bitcoin,” he said.

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“Institutional investors will likely want to see further evidence that inflation is moving sustainably lower before increasing exposure. At the same time, the escalating conflict involving Iran introduces additional uncertainty, particularly given the risk of ongoing oil supply disruptions.”

Thielen predicted that these disruptions could become “more pronounced” during the summer months, “placing renewed upward pressure on inflation expectations.”

Bitcoin “remains vulnerable,” he said, predicting that a break below $60,000 appears “increasingly likely” over the coming days.

Rates have been unchanged since December 2025. Source: Trading Economics

Risk appetite will return only when inflation drops

HashKey Group senior researcher Tim Sun said that while rate hike expectations are “heating up,” the probability of the Fed raising interest rates this year is “relatively low.”

“Only when inflation drops, rate cuts become viable, and liquidity improves alongside lower capital costs, will the overall risk appetite truly reverse.”

CME futures predict a 98.4% probability that there will be no change in rates at the Fed’s next meeting on June 17.