Bitcoin, Ethereum, and various other cryptocurrencies experienced a notable increase after the recent U.S. inflation data revealed a smaller-than-anticipated rise. The Consumer Price Index (CPI) for March rose by 2.4% compared to the previous year, which is lower than the forecasted 2.6%. Core CPI, excluding the often volatile sectors of food and energy, increased by 2.8%, down from the 3.1% observed in February. This inflation data brought relief to the markets, including crypto assets like Bitcoin, which surged by 7.5% to reach $82,000. Ethereum also saw gains, rising to $1,600, while Solana appreciated by 11%, landing at approximately $114.
This latest inflation report follows President Donald Trump’s decision to postpone tariff increases for 90 days, alleviating some trade-related concerns. Previously, Trump had implemented higher tariffs on Chinese imports and increased tariffs on foreign automobiles and parts, resulting in worries regarding escalating trade tensions. However, the suspension of certain tariffs sparked a positive market reaction, helping to alleviate fears of an economic downturn.
Nonetheless, Trump has raised tariffs on Chinese imports to 125%, maintaining a tough approach to trade, particularly with China. The Federal Reserve is closely watching inflation and the implications of the tariffs. While inflation has decreased, it still surpasses the Fed’s 2% target, and this new data represents the second month in a row where both overall inflation and core inflation have declined.
The drop in inflation has fostered a sense of optimism within the markets. Bitcoin and Ethereum, along with other cryptocurrencies, capitalized on the news, as investors remain hopeful that the decline in inflation may ultimately lead to a more accommodative approach from the Federal Reserve, including potential cuts in interest rates. Analysts are keeping a close eye on forthcoming CPI reports to assess how tariffs will influence inflation in the near future.
The inflation data for March indicated a significant downturn in inflation, despite rising tariffs. This has offered markets a sense of assurance, as it raised expectations that the Federal Reserve might reconsider its policies in response to economic pressures. The combination of a pause in some tariffs and the better-than-expected inflation figures has bolstered support for both equities and cryptocurrencies.
Currently, Bitcoin is valued around $82,000, reflecting a 7.5% increase over the past day, while Ethereum rose by 11%. The broader market has also witnessed positive movements following the inflation news, with the Federal Reserve’s impending response still clouded in uncertainty but under vigilant observation. This latest data indicates a possible shift in inflationary trends, even as trade relations with China continue to affect market sentiment.
