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Key Takeaways
Bitcoin spot ETFs are now sitting at US$4.8bn in outflows over the last two months.
I pull up the hood on inflation this week and explain one of the key ingredients: energy.
Why this recent move in oil could have a big economic impact over the coming months, easing the pressure on markets rather than adding to it.
Chart of the week: a breakdown of what moves US inflation measurements.
The past few weeks has seen Bitcoin spot exchanged traded funds (ETFs) continue to sell off. With the end of June at arm’s reach, we sit at US$2.45 bn in net Bitcoin sold off from these products, marginally higher than May’s US$2.43 bn.
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The pressure doesn’t seem to be easing, and the impact of spot selling is showing in the tape, with Bitcoin now down -17% for the month of June at the time of writing.
This week I want to dial into what could be a potential circuit breaker that I will be watching in the weeks and months ahead. For those who've been following recent Squawks, you’ll know it’s not a new one: Inflation.
Let's dig in.
The headline isn’t the story
Here’s the number everyone watches: The consumer price index, or CPI, which tracks how much more expensive a basket of everyday goods and services is than it was a year ago. In May this year, it jumped to 4.2% according to the US Bureau of Labor Statistics.
This is of interest to many, as if we dial back to just January this year, it was sitting around 2.4%. So in the space of a few months, a key measure of inflation has shot right back up. The chart below depicts the sharp rise following years of a steady decline.
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Inflation matters, as the rising costs of goods and services adds more pressure to not only consumers, but policymakers too. There is little incentive for legislators to ease financial conditions like interest rates or provide stimulus packages for growth if there are too many people spending in an economy.
So naturally we start asking, why the jump? Well, that’s where things get interesting. Let's break down the individual components of the above headline inflation figure to find out.
Chart of the week: The breakdown of how inflation is calculated
The chart below takes that single headline figure we showed above (CPI) but breaks it into its individual building blocks.
Boom, there it is.
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Nearly every row of the inflation calculator is steady, or even falling in some cases, other than energy and transportation over the last few months. These two dimensions are impacted by the supply chain disturbances caused by the conflict in the Middle East (and the global headlines surrounding it).
It now makes a little more sense why we’ve seen a spike in inflation data now, right?
And while we don’t know what is going to happen on the diplomacy side of things, it does give us a better understanding of what to pay attention to.
Since there are no other real drivers for inflation in recent months, if we do see stability return to the Strait of Hormuz and the Middle Eastern conflict, we have a reasonable basis to expect inflation to fall. Potentially heading back toward the 2% Fed target.
So why do we care about this on a crypto blog? Well, inflation can hold policymakers in the US on a leash. While it’s running hot, there is little interest in monetary easing policies. And digital assets like Bitcoin and altcoins have, until proven otherwise, mostly seen bullish trends when there is economic growth and loose fiscal conditions (like low interest rates).
None of this is an overnight change, and there is a good chance the shift I spoke above in today’s Squawk could take many weeks or months to materialise.
But I hope that explains one key driver in the market that I’m watching as we pass the halfway mark of 2026. Sometimes it pays to look beyond just the headlines.
See you next time.