Bitcoin’s market performance saw a notable upswing following the latest U.S. inflation data release, signaling renewed investor optimism.
Bitcoin’s value experienced a significant surge, surpassing $84,000, after the new inflation data indicated consumer prices rose less than anticipated in February. This development eased concerns about potential aggressive interest rate hikes by the Federal Reserve.
According to the latest Consumer Price Index (CPI) figures, prices have risen by 2.8% over the past year, slightly below the 2.9% increase expected by economists. Meanwhile, the Core CPI, which omits the more volatile food and energy prices, increased by 3.1%, a decrease from January’s 3.3%. Such figures boosted confidence among investors, triggering advances not only in cryptocurrency markets but also in traditional stock markets.
Ethereum gained value, reaching $1,938, while Solana climbed to $127. In the equities sector, Dow Jones Industrial Average futures showed an increase of 223 points. The S&P 500 and Nasdaq 100 indices also recorded gains of 0.8% and 0.9%, respectively.
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A breakdown of the CPI data reveals that shelter costs, which constitute a substantial element of the index, rose by 0.3% in February. This increase was partly offset by declines in gasoline and airline ticket prices, providing some relief to consumers.
President Donald Trump expressed his views on the data via Truth Social, echoing the sentiment that prices were decreasing. His administration’s 25% tariffs on steel and aluminum imports have previously sparked concerns regarding their impact on inflation, and discussions continue around their long-term economic effects.
Minutes from the Federal Reserve’s December meeting suggested that such policies could keep inflation higher than the 2% target. Traders now anticipate three interest rate reductions by the end of the year, a sharp increase from the single cut expected a month earlier, as indicated by the CME FedWatch Tool.
Attention is now turning to the Federal Open Market Committee (FOMC), which is scheduled to convene next week to update its forecasts for economic growth and interest rates. The upcoming Producer Price Index (PPI) report, due on Thursday, is expected to shed more light on inflation trends. A further drop in wholesale prices could spark additional market rallies, driven by hopes of future rate cuts.
Although inflation has moderated, it still exceeds the Fed’s 2% objective, prompting a cautious stance from policymakers. Chairman Powell has recently emphasized the central bank’s commitment to a balanced approach, suggesting that while economic conditions seem favorable, adjustments in monetary policy will be measured.
The latest inflation data has reinvigorated market sentiment, with Bitcoin and other assets responding positively. However, with inflation rates still above the Federal Reserve’s target, the approach towards monetary policy remains watchful.
