Could the Fed and Cooling Inflation Kickstart a Bigger Bitcoin Rally in July?

by | Jul 16, 2026 | General

Bitcoin (CRYPTO: BTC) could gain support from cooling inflation and fading expectations for another Federal Reserve rate hike, according to Wolfe Research Chief Economist Stephanie Roth.

Why Inflation Is Cooling

In an interview with Anthony Pompliano on July 16, Roth highlighted her expectations of a slowdown in inflation through the summer as several temporary pressures begin to fade.

Roth outlined that the impact of tariff-related price increases has been smaller than feared and should continue to ease as the economy moves further past the initial impact.

AI-related inflation could also moderate as it would become disinflationary over the longer term with companies using the technology to cut costs and improve productivity.

The cooler CPI report significantly reduced the likelihood of a July rate hike.

Roth said a rate cut remains unlikely this year unless the labor market weakens materially.

Prediction platform Polymarket now assigns a 96% probability that the Federal Reserve will not raise interest rates, up from roughly 60% earlier this week.

Core inflation is still running near 3%, well above the Fed’s 2% target. However, simply removing expected rate hikes could ease financial conditions.

Bond yields could decline as traders price out additional tightening, supporting equities, cryptocurrencies and other risk-sensitive assets.

Bitcoin climbed to a three-week high of $65,000 following the inflation report, lifting sentiment across the broader cryptocurrency market.

What It Means For BTC

Bitcoin typically benefits when traders expect lower interest rates and easier liquidity conditions because investors become more willing to hold volatile assets.

The latest inflation report weakens one of the market’s biggest bearish catalysts: renewed Fed tightening.

Bitcoin could also benefit if declining inflation revives the debasement trade, particularly if government spending and global money supply continue to expand while real interest rates decline.

However, Roth said Bitcoin and gold are increasingly trading on fundamentals rather than fears that the Fed will lose its independence or allow inflation to spiral.

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