Bitcoin and other cryptocurrencies moved higher on Wednesday, reacting to the latest US inflation data. The flagship cryptocurrency BTC was changing hands near $30,800 at 11 am ET, having touched intraday highs of $31k on Coinbase. The second largest cryptocurrency by market cap Ethereum was trading towards $1,900 as the total market cap rose 1.5% to above $1.24 trillion.

The rest of the top 10 coins were also in the green, with the biggest gainers being 1inch, NEM and Helium, all rising double digits with Helium trading to highs of $1.48. Litecoin, which had plunged 10% in the past week, had recouped some of the losses and was 5% down in that timeframe.

The US consumer price index (CPI) data for June showed inflation had cooled year-over-year during the past month. Prices rose 0.2% month-over-month and 3% YoY in June, the latter a deceleration from the 4% recorded in May. This was at its slowest since March 2021 and led stocks to open higher on Wednesday.

Charlie Bilello, Chief Market Strategist at Creative Planning Investor tweeted: “US CPI has moved down from a peak of 9.1% last June to 3.0% today. What’s driving that decline? Lower rates of inflation in fuel oil, gasoline, gas utilities, used cars, medical care, apparel, new cars, food at home, electricity and transportation. Shelter is the only major component that has a higher inflation rate than a year ago and it is a wildly lagging indicator (actual housing inflation is much lower w/ home prices/rents down YoY)”.

The Federal Reserve paused its interest rate hike cycle last month, although it noted it was likely to go for a 0.25% hike on another two occasions before the end of 2023. Jim Bianco of Bianco Research LLC noted markets still expects a 25 bps rate hike on July 26. How markets react to upcoming central bank moves will be key to both equities and crypto.