Bitcoin rallies past $84K as US inflation cools, focus shifts to Fed policy

Bitcoin (BTC) surged past $84,000 on Wednesday after US inflation data showed a sharper-than-expected decline, reinforcing hopes that the Federal Reserve may ease monetary policy sooner than anticipated.

The US Consumer Price Index (CPI) rose 2.8% YoY in February, down from 3% in January, and below the market forecast of 2.9%, according to the US Bureau of Labor Statistics.

The softer inflation reading brings the rate closer to the Fed’s 2% target, a key threshold that could influence future interest rate decisions. As a result, Bitcoin jumped minutes after the release, extending its rebound from last week’s sell-off.

Bitcoin recovers from recent losses

Earlier in the day, Bitcoin was holding steady at $82,700, recovering from its recent drop below the 200-day Exponential Moving Average (EMA) at $85,664 on Sunday. The cryptocurrency fell 9.14% in a single day, finding support at $78,258 before rebounding 5.52% on Tuesday, according to CoinMarketCap data.

Agne Linge, Head of Growth at WeFi, told FXStreet that the crypto market continues to exhibit risk-on behaviour, though investor sentiment remains cautious. “Despite key developments, including a Bitcoin reserve announcement in the US, sell-offs have persisted since March 3, with millions of dollars in liquidations impacting long traders,” Linge noted.

Macroeconomic uncertainty still weighs on crypto markets

Despite Bitcoin’s rally, uncertainty over global trade tensions and Fed policy continues to cloud sentiment. The latest Bitfinex report highlighted a mixed macroeconomic backdrop, pointing to steady job growth, rising wages, and efficiency gains, but also inflationary pressures and cautious business expansion.

Also read: Cooler US inflation in February puts Fed’s next move in focus

The US labour market remains resilient, with 151,000 jobs added in February, although the unemployment rate ticked up to 4.1% due to government job cuts. While strong wage growth typically supports consumer spending, ongoing inflation concerns could complicate expectations for multiple Fed rate cuts this year.

A cooler inflation print has historically boosted risk assets like cryptocurrencies, as it raises bets on Fed rate cuts. However, Trump’s aggressive trade policies add another layer of uncertainty, with some investors pivoting towards safe-haven assets like gold rather than speculative markets like crypto.