CPI Data Sparks Optimism for Rate Cuts
Bitcoin and U.S. stock markets saw strong gains on Wednesday after the Consumer Price Index (CPI) inflation rate for February came in lower than expected. The softer inflation data reinforced investor confidence that the Federal Reserve could pivot toward interest rate cuts in the near future, fueling a rally across risk assets.
According to the U.S. Bureau of Labor Statistics, the CPI rose 0.2% in February, bringing annual inflation down to 2.8%, lower than the projected 2.9%. This marks a slowdown from January’s 0.5% increase. Additionally, Core CPI, which excludes food and energy prices, also rose 0.2% month-over-month and 3.1% annually, both slightly below expectations.
Bitcoin Surges as Market Sees Rate Cut Potential
Bitcoin responded positively to the inflation news, jumping nearly 4% in the past 24 hours and trading at $83,400 as of Wednesday morning. The rally comes as risk assets continue to rebound, with traders speculating that potential monetary easing could drive further gains in both crypto and equities.
“Today’s data adds to the case for rate cuts, and risk assets are rallying in response,” said Matt Mena, Crypto Research Strategist at 21Shares.
He also noted that Bitcoin is approaching a breakout above its $90,000 resistance level, with the potential to test $95,000 before making a run toward the highly anticipated $100,000 milestone.
Stock Market Sees Strong Gains
U.S. stocks rallied alongside Bitcoin, with all three major indexes posting solid gains after the inflation report:
- Dow Jones Industrial Average climbed 274 points (0.7%), trading at 41,707.
- S&P 500 rose 1.2% to approximately 5,640.
- Nasdaq Composite surged 1.8% to around 17,752.
Tech stocks were among the biggest gainers, with Nvidia surging over 6%, Meta Platforms up 4%, and Tesla jumping 8% in early trading.
Market Volatility Eases Amid Positive Sentiment
Investor sentiment also improved, reflected in the Cboe Volatility Index (VIX), Wall Street’s so-called "fear gauge", which fell 5% to 25, signaling reduced market uncertainty.
At the same time, Treasury yields edged higher, with the benchmark 10-year yield settling above 4.28% on Tuesday.
Trump’s Trade Policy Briefly Shakes Markets
The market had experienced volatility in the previous session following President Donald Trump’s announcement of increased tariffs on Canadian aluminum and steel, which he later reversed. All three major indexes had closed lower on Tuesday before rebounding sharply after the CPI data release.
With inflation cooling and speculation of Federal Reserve rate cuts growing stronger, investors are watching closely to see if Bitcoin can push past resistance levels and whether the stock market rally will continue.
