Bitcoin’s BTC$64,532.45 rally on Tuesday petered out as investors considered a weaker-than-forecast U.S. inflation figure wasn’t enough to prompt a Federal Reserve interest-rate cut.

While it’s still 3% higher over 24 hours, the largest cryptocurrency has dropped 0.5% since midnight. Ether (ETH), up 4.7% in 24 hours, has also pulled back by 0.5%.

On Polymarket, the perceived odds of a rate increase plunged from 34% to 6.7% after the data came out. Bettors now weigh a 93% chance the Federal Reserve will leave rates unchanged this month, and the CME’s FedWatch shows 30-day fed funds futures prices indicating just a 14.4% chance of an increase.

“Crypto's reaction to the latest CPI report shows the market is becoming more selective in how it interprets macro signals,” Markus Levin, co-founder of XYO, told CoinDesk. “While falling inflation reduces pressure on markets and improves the outlook for risk assets, traders are no longer assuming that every favourable inflation print will automatically lead to rate cuts or new all-time highs.”

Fed Chair Kevin Warsh has said one favorable inflation report was not enough to declare victory, and kept the central bank’s next move tied to incoming data. A July rate cut from the European Central Bank is also effectively off the table, even as Brent crude now above $85 a barrel keeps inflation risks elevated.

More guidance will come from U.S. producer prices, due later today, and PCE data near the end of the month.

“The focus has shifted toward whether inflation can continue to cool without showing signs of a rebound,” Levin said.

That leaves bitcoin’s next move tied less to the July decision than to whether inflation keeps cooling as oil prices rise. Geopolitical developments will remain key as well, given their current impact on oil and gas flows. Stay alert!

Read more: For analysis of today's activity in altcoins and derivatives, see Crypto Markets Today . For a comprehensive list of events this week, see CoinDesk's "Crypto Week Ahead."

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