Inflation will cooler than expected in February, and we hope that the Federal Reserve will approach a cut in interest rates. However, the crypto market remained largely unresponsive despite positive economic signals.
Wednesday’s Consumer Price Index report showed that inflation has eased to 2.8% over the past 12 months, down from 3% in January, slightly beating economists’ forecasts of 2.9%.
Perhaps surprising, the crypto price was unresponsive. Bitcoin (BTC) was trading at $82,770.45 late Wednesday afternoon. The total crypto market was $2.68 trillion, down 0.25% in the past day.
read more: Crypto faces short-term volatility, but long-term growth continues: Bitgo Exec
Dr. Yang: “Taxes can make inflation more sticky.”
Dr. Youui Yang, Chief Economist at Bitmining, listed on the NYSE, said in a statement obtained by Crypto.News that the market’s calm response reflects deeper fears, particularly about the policy risks from President Trump’s new trade tariffs.
“The lower CPI than expected today is bullish and informs of faster speed reductions, but the code is not responding strongly,” Yang said. “The fear of the market requires one or more good prints to regain confidence.”
Yang pointed to Trump’s aggressive tariffs on steel and aluminum, which took effect Wednesday, as a potential headwind of inflation and market stability. The tariffs have already sparked retaliation from Europe with US goods worth $28 billion, due to commence in April.
“The real problem is Trump’s aggressive tariffs, and there is a risk of more persisting inflation, especially while crashing markets and causing layoffs due to government efficiency (DOGE),” Yang explained.
This creates a tough position for the Federal Reserve. “High inflation due to tariffs makes interest rate reduction difficult,” Yang said. “However, market crashes and unemployment put pressure on the Fed to cut interest rates earlier. If inflation is rekindled too early, future policies will become more severe.”
The crypto market is looking for clearer policy signals
Yang pointed out that the crypto market is being restrained due to uncertainty about future policy directions.
“Investors are looking for stronger support from the White House and the Fed, especially after last week’s Crypto Summit failed to reassure the market,” he said.
The recent Crypto Holdhouse Summit, which brings together industry heavyweights and government officials, was expected to lead to more favorable guidance on crypto regulations. However, the lack of concrete results made the market unsure of the administration’s position on cryptography.
“Until a clearer signal emerges, fear and uncertainty will hamper the feelings of the crypto market,” Yang concluded.
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