The Federal Reserve inflation gauge is showing signs of easing across financial markets, including cryptocurrencies, and triggering responses. As inflationary pressures drop, investors will reassess their positions, leading to movement in the price of Bitcoin and other digital assets.
According to the Labor Bureau, the consumer price index in February was softer than expected, rising seasonally adjusted 0.2% from January, bringing annual inflation to 2.8%. Dow Jones economists expected profits of 0.3% and 2.9% each month and annual profits.
The unadjusted CPI annual rate for the US February was recorded at 2.8%, the lowest since last November. The seasonally adjusted CPI monthly rate for the US February was recorded at 0.2%, the lowest since last October. The unadjusted Core CPI annual rate for the US February has been recorded…
– WU Blockchain (@wublockchain) March 12, 2025
Core CPI, which excludes volatile food and energy costs, increased by 0.2% that month and 3.1% annually. This is lower than expected, with an annual growth rate of 0.3% per month and a 3.2% annual growth rate.
Historically, lower inflation rates and potential rate reductions have boosted risky assets, including cryptocurrencies.
How the crypto market responded
Crypto Market Price Actions were first moved higher and then mixed after release. Bitcoin has recovered by 5%. Meanwhile, Ethereum fell 0.87%. XRP, SOL and ADA rose more than 3% in the last 24 hours at press. During this time frame, social cryptocurrency PIs increased by 19%. Tron, Aptos, Aave and Ethereum Classic were in red, listing 1% to 7% losses.
According to the CME FedWatch tool, the market was recently priced at a three-quarter point rate this year.
Another inflation gauge, the producer’s price index, is scheduled to be released Thursday. Both measurements should shed some light on the health of U.S. consumers in the face of recent indicators that the economy may be softening.
Those numbers precede the Federal Reserve March meeting, which will take place later this month. The Federal Reserve has been patiently sitting in a waiting mode to further clarify its inflation outlook, with authorities primarily expected to hold the constant fees at next week’s meeting.
