BlackRock Flags Inflation Risk as May U.S. CPI Report Looms, Raising Concerns for Bitcoin and Crypto Markets

BlackRock is closely monitoring the upcoming May U.S. Consumer Price Index (CPI) report, which is expected to provide critical insight into how rising geopolitical tensions in the Middle East are influencing inflation in the United States. The investment giant believes the data could reveal the early effects of higher energy costs stemming from the ongoing U.S.-Iran conflict.

In its latest weekly market commentary, the BlackRock Investment Institute said investors are looking to the May inflation figures for a clearer understanding of how the Middle East energy shock is affecting already persistent price pressures. The firm noted that the full impact of the disruption has not yet been reflected in economic data and will largely depend on how the situation develops in the coming weeks.

The U.S. Bureau of Labor Statistics is scheduled to release the May CPI report on Wednesday at 8:30 a.m. ET. According to economists surveyed by Reuters, annual inflation is expected to rise to 4.2%, up from 3.8% in April and marking the highest reading since April 2023.

A stronger inflation reading would reinforce concerns that price growth remains well above the Federal Reserve’s 2% target. As a result, investors may increasingly expect the Fed to keep interest rates elevated or even consider additional rate hikes rather than implementing cuts that many market participants anticipated earlier in the year.

Higher interest rates typically reduce demand for risk assets such as cryptocurrencies. This dynamic could place additional pressure on the crypto market, which has already experienced significant weakness. Bitcoin recently fell nearly 14%, dropping below the $60,000 level amid broader market uncertainty.

BlackRock also highlighted the Strait of Hormuz as a key risk factor. The firm warned that a prolonged closure of the critical shipping route extending into July could intensify the energy shock and push inflation higher. Such a scenario could become even more significant if U.S. oil inventories continue to decline toward levels not seen in four decades.

According to BlackRock, sustained disruptions in global energy supplies could make inflation more difficult to contain, creating additional challenges for policymakers and increasing volatility across financial and cryptocurrency markets.