Bitcoin edged lower during trading after reaching its highest level in nearly three weeks as investors balanced two major market drivers. Softer than expected US inflation data strengthened expectations that the Federal Reserve could delay any near term interest rate hike, while escalating military tensions between the United States and Iran encouraged a more cautious approach toward risk assets.
Bitcoin initially benefited from the release of US Producer Price Index data, which recorded its first monthly decline since August 2025, driven mainly by a sharp fall in energy prices. The report reinforced earlier Consumer Price Index data, pointing to easing inflationary pressures across the US economy.
The headline Producer Price Index fell by 0.3% month over month compared with expectations for no change, while the core index increased by only 0.2%, below market forecasts. On an annual basis, headline producer inflation slowed to 5.5%, while core inflation eased to 4.7%, indicating that price pressures continued to moderate.
The softer inflation figures reduced expectations of a Federal Reserve rate increase at the upcoming policy meeting, with market pricing showing only around a 10% probability of a hike. This provided temporary support for cryptocurrencies, which typically face pressure during periods of higher interest rates.
However, the positive momentum quickly faded as investor attention shifted to developments in the Middle East. The United States intensified military operations against Iran by launching two rounds of strikes in a single day, while reports indicated that President Donald Trump was considering expanding military operations, including actions targeting strategic locations near the Strait of Hormuz.
Trump also maintained a firm stance toward Iran, stating that military operations would continue until Tehran returned to negotiations, adding to uncertainty across global financial markets.
Within the cryptocurrency market, Ether gained more than 2%, while XRP and Cardano posted modest advances. Solana and BNB recorded slight declines, Dogecoin moved lower, and the TRUMP token advanced.
In the energy market, oil prices extended gains for a fourth consecutive session as geopolitical risks in the Middle East intensified. Prices rose after the United States launched fresh strikes on Iranian military targets linked to threats against commercial shipping, reviving concerns over supply security through the Strait of Hormuz, a route that carries around one fifth of global oil and liquefied natural gas trade.
Washington stated that the strikes were intended to reduce Iran’s ability to threaten maritime traffic, while Tehran warned that continued escalation could lead to broader disruptions in regional energy exports.
Oil also received additional support after the US Energy Information Administration reported a 1.7 million barrel decline in crude oil inventories and a 1.5 million barrel drop in gasoline stocks, reflecting resilient seasonal demand despite an unexpected increase in distillate inventories.
The International Energy Agency noted in its July Oil Market Report that oil flows through the Strait of Hormuz had partially recovered during June. However, renewed military tensions in July have increased uncertainty and could affect expectations for future growth in global oil supply.
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