Analysis: Rising expectations of a July interest rate hike by the Federal Reserve have pressured Bitcoin lower.

Bitcoin has fallen more than 2% in the past 24 hours, trading at around $62,380. Market expectations of a Federal Reserve (Fed) interest rate hike as early as July have risen sharply: funding markets now put the probability of a rate hike this month at roughly 50%, up from only about 10% just a few days ago. The shift in expectations stems from Fed Governor Christopher Waller’s remarks that officials may need to raise rates to curb price pressures. U.S. two-year Treasury yields have since climbed to 4.29%, hitting their highest level since the start of last year. Escalating U.S.-Iran tensions and a sharp rally in oil prices have also amplified inflation concerns: WTI crude oil futures have risen from $67 per barrel at the start of the month to nearly $80 per barrel. The U.S. Labor Department will release June’s Consumer Price Index (CPI) on Tuesday. Economists surveyed by Bloomberg expect the year-over-year rise in headline CPI to fall below 4%, with both headline and core inflation likely seeing their first monthly decline since January; May’s figures were 4.2% and 2.9% respectively. However, the recent oil price surge may lead markets to view this CPI data as a lagging indicator. If inflation proves more persistent, it could further intensify rate hike fears. Markets will next focus on Federal Reserve Chair Jerome Powell’s testimony before Congress. ING analysts note Powell can emphasize that inflation expectations remain relatively moderate, and there is sufficient basis to keep interest rates unchanged; even if a rate hike is ultimately delivered, it could be reversed shortly after, with future rate cuts likely to exceed hikes in magnitude.