The U.S. Bureau of Labor Statistics reported a monthly increase in the Consumer Price Index (CPI) of 0.2% per month, representing a 0.3% decrease compared to the 0.5% registered in January.
The yearly fluctuation in February was 2.8%. The results were better than the market forecast of 2.9%.
This data had an almost immediate effect on the price of Bitcoin (BTC), which won over $83,000.
The inflation facts were the breath of life for financial markets, including BTC and cryptocurrency. This suffered a significant fall as a result of the commercial war unleashed by US President Donald Trump.
As reported by Cryptonotics, the president applied 25% tariffs on Mexico and Canada, and 20% on products from China. Furthermore, it did not rule out implementing certain European Union import measures.
He postponed the measure after a dialogue with authorities from Mexico and Canada, but on March 11, he added another 25% to Canada’s steel and aluminum, raising market tensions and incites fears of a recession in the US economy. Possibility Trump himself showed during an interview with the chain Fox News.
The Federal Reserve will be analysed on March 19th, so slowing down the IPC is important. This decline could lead to consideration of cuts from interest rates in the coming months ranging from 4.25% to 4.50%.
There is a 97% chance that the Fed will not announce interest rate cuts next Wednesday, according to CME Group Firm’s FedWatch tool.
However, after the FOMC meeting, a speech from Fed Head Jerome Powell could bring good news. Sending messages that dissipate uncertainty can strengthen investors’ trust and stabilize the market.
Otherwise, adopting a more restrictive tone can further deepen these falls in risky assets such as BTC and cryptocurrency.
At this point it is worth mentioning the paper by market analyst Daniel Mbudi, who suggests that Trump is promoting commercial wars as a strategy. Generate “self-induced recession” With major financial strength around the world.
“If the economy slows down enough, the Fed will be forced to lower rates faster, encouraging refinancing of public debt at a lower cost,” he said in the X-Post.
Muvdi believes this could create “short-term pain” in the market, A successful run will pave the way for a bullish rally towards the end of 2025.
As explained in Cryptopedia, Cryptopedia, the education section of Cryptopedia, reduces debt costs and gives the system more liquidity when interest rates are low. These scenarios increase appetite for risk Investors choose stocks, BTC and other cryptocurrencies in search of greater profits.
On the other hand, when the rate is high, they will be sheltered in assets that generate less yields, but are not exposed to market fluctuations such as treasure bonds.
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