Bitcoin (BTC) jumped over $84,000 following the release of the latest United States Consumer Price Index (CPI) figures.
The United States Bureau of Labor Statistics issued a report that inflation had slowed to 2.8% year-over-year in February, from 3% in January. The fall below projected estimates of 2.9% raised optimism in the crypto market.
Impact of CPI Data on Bitcoin
The sharp fall in inflation has caused a bullish reaction in the price of Bitcoin. Bitcoin went above $84,000 soon after the announcement of CPI. According to market analysts, the reason behind the rally is the fact that the Federal Reserve will cut interest rates for the rest of 2025. Declining inflation rates may prefer riskier assets like Bitcoin.
The Core CPI, excluding food and energy prices that are volatile, rose 3.1% from a year ago, below the expected 3.2%. The data indicate a trend of stabilization in inflation, which the Federal Reserve monitors when determining monetary policy.
Federal Reserve’s Monetary Policy Outlook
The Federal Reserve, which cut interest rates three times in 2024, has not yet cut any rate in 2025. The central bank is attempting to balance the economy while confronting inflationary pressures. Fed Chairman Jerome Powell had stated that unless inflation returns more to the Fed’s 2% target, the institution will continue to be tight money.
Most recent CPI releases carry the potential for influencing future Federal Reserve action. And if inflation does continue to decline, then the Fed will lower the rates later in the year and, with high confidence, lower the benchmark rate to levels between 3.75% and 4.00%. That would be lowering the cost of lending money and, in turn, increasing demand for assets such as Bitcoin.
Market Reactions and Future Predictions
Market reactions to the publication of the CPI have been quick. Bitcoin was at $83,000 before the publication, and its rise thereafter is an indication of investor sentiment. Bitcoin has so far posted a 0.6% rise over the past 24 hours, according to CoinGecko.
In spite of the rosy projection, foreign pressures such as Trump’s tariffs have been warned against by economists as they would turn the tide against inflation and trigger price rises. Powell warned that the tariffs would create new inflationary pressures that would influence consumer expectations and overall market stability.
Investors are warned to watch closely as they ride Federal Reserve activity and sentiment in the markets. Bitcoin price movements and inflation will be the most likely to affect trading patterns over the next few months.
