(Bloomberg) -- Bitcoin halted a two-day slide with renewed expectations for US interest rate cuts fueling demand for riskier assets.

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The largest cryptocurrency gained as much as 3.5% to $69,642 as signs that inflation is cooling bolstered bets the Federal Reserve will cut rates this year. Smaller cryptocurrencies such as Ether, Solana and Dogecoin also rallied.

“FalconX saw significant buying through both the spot and derivatives desks during the 3+% sell off yesterday,” said Ravi Doshi, head of market at the prime broker FalconX. “Those bets paid off.”

Shares of crypto-related companies also gained. Crypto exchange Coinbase Global Inc. jumped as much as 6%, while Bitcoin proxy MicroStrategy Inc. increased as much as 6.9%.

Bitcoin hit a record of $73,798 in mid-March, lifted by inflows into dedicated US exchange-traded funds. But it struggled for new highs in the past three months amid shifting rate expectations.

The so-called core consumer price index — which excludes food and energy costs — climbed 0.2% from April, Bureau of Labor Statistics figures showed. The year-over-year measure rose 3.4%, cooling to the slowest pace in more than three years, according to data out Wednesday.

“This data sets the Fed up nicely for rate cuts as early as July,” said Doshi.

The policy-setting Federal Open Market Committee is widely expected to hold its benchmark rate steady for a seventh consecutive meeting Wednesday as it awaits more evidence that inflation is still moving down toward its 2% target. The rate decision, and the projections, will be released at 2 p.m. in Washington. Fed Chair Jerome Powell will hold a press conference 30 minutes later.

“Crypto is a mature asset class now, and similar to broader markets, we should expect upticks when indicators like the CPI suggest interest rates cuts may occur in the not so distant future,” said Michael Safai, co-founder of quantitative trading firm Dexterity Capital.

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