Today, the latest inflation figures from the United States have been released, and the results have surpassed economists' expectations. The annual inflation rate (CPI) came in at 2.8%, while analysts had anticipated 2.9%. Core inflation, which excludes food and energy, also came in lower at 3.1% instead of the expected 3.2%. These figures have had an immediate impact on the financial markets.

Positive Market Reaction

Investors are responding enthusiastically to these encouraging figures. Bitcoin, which is often sensitive to macroeconomic developments, surged by approximately 2%, briefly touching $84,500. The stock markets also reacted positively, with the S&P 500 rising by 0.8% in pre-market trading. Lower inflation implies reduced pressure on the US central bank, the Federal Reserve, to further raise interest rates. This is positive for both the stock and cryptocurrency markets, as lower rates make borrowing cheaper.

What Does This Mean for Bitcoin?

After several months of volatility, during which Bitcoin fell over 20% from a peak of $109,225 on 20 January 2025, the current inflation figures offer a glimmer of hope. The lower inflation strengthens expectations that the Federal Reserve will not tighten monetary policy further, which could be beneficial for riskier assets like Bitcoin.

However, inflation remains above the 2% target set by the Fed, meaning uncertainty still surrounds future monetary policy. Macro-economists and analysts are responding positively to the figures. The financial newsletter The Kobeissi Letter remarked on social media: “This marks the first decline in both the regular and core CPI since July 2024. Inflation in the US is cooling off.”

Continued Optimism for Crypto

The responses from crypto analysts have been overwhelmingly positive. Macro-economist Alex Krüger referred to it as “good news,” while Anthony Pompliano, a well-known figure in the crypto world, suggested that the Fed should immediately lower interest rates. Rate cuts by the Federal Reserve are generally viewed as positive for Bitcoin and other cryptocurrencies, as lower interest rates encourage investors to shift capital towards riskier assets such as digital currencies.

If inflation stabilises further in the coming months, this could provide room for a rate cut later this year, which would be favourable for Bitcoin and other riskier assets. For now, the market seems to relish the positive news, and investors are keeping a close eye on how the Fed and other major players respond.