The Consumer Price Index for April rose 0.4% month-over-month and 2.8% year-over-year, overshooting economist forecasts of 0.2% and 2.7% respectively.

Bitcoin responded by dropping 1.2%, briefly touching $79,933 on May 13 before stabilizing around $80,000.

The Fed isn’t cutting anytime soon

The CME FedWatch tool now shows a 97.1% probability that the Federal Reserve holds rates steady at its June meeting. There’s now over a 65% chance that rates stay exactly where they are through the end of the year.

Major financial institutions are pushing their rate cut forecasts into 2027 and even 2028.

The 10-year Treasury yield climbed to 4.44% following the CPI print, while stock futures fell and the dollar strengthened.

Bitcoin’s inflation hedge thesis under pressure

Many analysts are now characterizing Bitcoin more as a high-risk asset than a reliable inflation hedge. When inflation surprises to the upside and Bitcoin drops rather than rallies, the “store of value” argument takes a hit.

Not everyone is bearish, though. Arthur Hayes, the BitMEX co-founder turned macro commentator, has predicted Bitcoin will reach $126,000, arguing that global liquidity dynamics will ultimately overwhelm the short-term pain from hot inflation prints.

What this means for crypto investors

The rate cut cavalry isn’t coming in June, probably not in September, and potentially not at all this year.

With Treasury yields at 4.44%, traditional fixed income becomes more attractive relative to volatile assets.