Analysts are expecting a slight decline in inflation. If the forecasts are confirmed, this will be the first simultaneous decline in the overall and core CPI numbers since July 2024.
What does this mean for bitcoin and the crypto market?
Inflation: What Do Analysts Expect?
In January, core inflation rose from 3.2% to 3.3% and the overall rate rose from 2.9% to 3%.
February forecasts:
- Core CPI will return to 3.2% (TEForecast may dip to 3.1%).
- The overall CPI will fall to 2.9%.
If the numbers match forecasts, it will confirm that inflationary pressures are easing and could bolster market confidence.
Why It Matters
Inflation has been gradually rising since September 2024, which has tempered investor expectations for a Fed rate cut. Now, if CPI does decline, the market will get a signal that monetary policy may be easing. Which means:
- Softer conditions for investment in risky assets.
- Possible reduction in interest rates in 2025.
- Potential capital inflows into cryptocurrencies.
Traders on Kalshi, who have accurately predicted 6 out of the last 8 CPIs, expect the figure to fall to 2.9%, which could add to the positivity.
What Will Be The Impact of Trump’s Trade Qars?
President Donald Trump recently imposed tariffs on imports from China, Canada and Mexico. These measures have already sparked a wave of discussion. Now the CPI report will show for the first time how the new trade policy has affected inflation.
If the duties have really driven up prices, inflation could exceed forecasts. This would increase pressure on the Fed, forcing the regulator to postpone rate cuts. But if the effect is weak, markets are likely to take that as a good sign.
What Does This Mean for Cryptocurrencies?
If inflation slows down, it will create a positive environment for the crypto market:
- Rising expectations of rate cuts → cheap capital will return to risky assets.
- Strengthening confidence in bitcoin as a hedge against long-term risks.
- Possible rebound after the recent decline in BTC.
But if inflation remains high, the Fed may maintain tight policy, which will increase pressure on the crypto market.
The key point: if the data coincide with expectations, the market will get stability. If CPI surprises in any direction, we should expect sharp volatility. All eyes are on the numbers. Today the crypto market may get an important signal for further movement.
UPD.
Inflation rate eased to 2.8% in February, lower than expected.
This article was originally Posted on Coinpaper.com
