TLDR
- Bitcoin showed a muted reaction after US CPI data revealed inflation eased to 2.4% in March, below expectations of 2.5%
- Following Trump’s 90-day tariff pause announcement, Bitcoin surged above $80,000
- The probability of a Federal Reserve interest rate cut in May has decreased from 57% to just 15%
- Core CPI rose only 0.1% in March against forecasts of 0.3%, potentially reigniting debate about Fed rate cuts
- Bitcoin pulled back slightly in early Thursday trading after Wednesday’s significant gains
Bitcoin showed a relatively flat response to the latest U.S. inflation data, even as the Consumer Price Index (CPI) revealed cooling inflation for March. The cryptocurrency was trading at approximately $81,800, representing a 7% increase on the 24-hour chart.
The March CPI data, released on April 10, showed inflation eased to 2.4%, down from 2.8% in February. This came in lower than analyst expectations of 2.5%.
At the headline level, CPI actually declined by 0.1% in March, contrary to economist forecasts of a 0.1% increase.
The core CPI, which excludes volatile food and energy prices, climbed only 0.1% in March. This was well below forecasts of 0.3% and February’s reading of 0.2%.
On a yearly basis, core CPI rose 2.8%, falling short of expectations for 3% and below February’s 3.1% reading.
Bitcoin’s Price Movement
Bitcoin briefly rose above $82,000 in the minutes following the CPI news release. This comes after a historic move higher the previous day.
The recent price pump for Bitcoin is closely linked to President Trump’s announcement of a 90-day pause on all tariffs except those on China. This news provided relief for Bitcoin, which had been under pressure from U.S. tariff concerns.
Before this announcement, Bitcoin traders had been adjusting their positions based on anticipated Federal Reserve monetary policy decisions.
According to CME FedWatch data, the probability of a Federal Reserve interest rate cut in May has dropped dramatically from 57% to just 15%. This shift is attributed to Trump’s tariff pause and the March FOMC minutes.
Market Response and Analysis
However, in early trading on Thursday, Bitcoin pulled back slightly, giving back some of Wednesday’s massive gains. This pullback was expected as part of a normal market correction after such a strong relief rally.
Bitcoin appears to be trading within a consolidation range, with $75,000 serving as a strong support level. Near the $85,000 level, the 200-day and 50-day EMAs (Exponential Moving Averages) are approaching each other, potentially forming what traders call a “death cross.”
While some traders pay close attention to such technical indicators, others consider the death cross to be a potentially false signal.
The cryptocurrency market is particularly sensitive to macroeconomic indicators like CPI because they influence Federal Reserve monetary policy decisions. When inflation rises, markets typically anticipate interest rate hikes.
Federal Reserve Outlook
Higher interest rates generally strengthen the U.S. dollar and make risk assets like Bitcoin less attractive, often leading to short-term price drops. Conversely, lower-than-expected inflation may suggest a more dovish Fed stance.
This can boost investor appetite for Bitcoin as an alternative store of value or inflation hedge.
For now, the June Fed meeting is looking like the action meeting, with a 75% chance of 25 basis points or more of rate cuts by the end of that event.
The market will be closely watching Friday’s Producer Price Index (PPI) report, which may further shape expectations for Fed policy in May.
Thursday’s CPI report contains data from before President Trump’s “Liberation Day” tariff announcements that sent markets into a multi-day panic, which was partially recovered following the 90-day pause announcement.
Bitcoin traders and institutional investors continue to watch these economic indicators closely, adjusting their portfolios based on perceived inflation trends and monetary policy expectations.
The longer-term outlook suggests Bitcoin may remain in its current consolidation range as the market attempts to determine if there’s enough momentum to drive prices back towards the $90,000 level.
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