The US consumer price index (CPI) fell to 0.68%, as measured by independent agency Truffleflation. This is the new annual minimum for this inflation measure. The record raises hopes for another rate cut that could boost financial markets, including Bitcoin (BTC) and cryptocurrencies.
The estimated decline in CPI was primarily driven by an approximately 20% decline in natural gas prices paid by residential consumers. This adjustment does not occur immediately, as utilities purchase gas from wholesale centers or under contract, and residential prices are adjusted later by regulatory factors and billing cycles.
data It comes at a sensitive time for investors. These are people who want clear signals about the direction of the economy. A more subdued inflation environment is often interpreted as a prerequisite for the Federal Reserve to begin cutting interest rates, which has historically favored risk-taking in assets such as cryptocurrencies.
If inflation declines sustainably, it reflects lower consumption in the economy and a possible widening of interest rate differentials, which could suffocate the economy. Therefore, central banks typically respond to these actions by cutting back on lending, which reduces borrowing costs and prevents economic slowdown. As a result, this increases the liquidity available to enter the market, which is why assets like Bitcoin tend to benefit from this practice.
Outlook for interest rate cuts within this year
Possibility of more flexible monetary policy Strengthened by Federal Reserve Reorientation predicted. Jerome Powell’s term ends on May 15, 2026. If confirmed, director nominee Kevin Warsh will replace Powell and is expected to lower interest rates as requested by US President Donald Trump.
The next interest rate definition is scheduled for March 18, but until then the market is likely to remain cautious as it waits for a clear signal.
According to CME research, There is a 80% chance that interest rates will remain the same. The next decision will be in the range of 350 to 375 basis points. The rest expect a 25-point decline. In this sense, potential cuts are not seen until later this year.
Bitcoin market tensions
Bitcoin price plummetedespecially last week when it hit $60,000, its lowest level in over a year. However, it has since recovered to around $70,000, indicating that demand in the lower zones is recovering.
Still, this move was not enough to reverse the accumulated damage. Bitcoin is currently trading at $68,000, 45% below its all-time high of $126,000 in October. Moreover, this decline erased the gains made during the 2023-2025 bull cycle.
On Friday the 13th, official US CPI data will be released. May cause volatility in the market and modify expectations regarding monetary policy. The previous record was 2.7% per annum, so any unexpected events, whether upward or downward, could have an immediate impact, especially if they go against the decline forecast.
In addition to this, other related announcements will also be made during the week, as reported by CriptoNoticias. Unemployment rates will be released on Wednesday, and initial jobless claims numbers will be released on Thursday. Both data provide signals about the strength of the labor market, a key factor in the Fed’s decisions.
In parallel, a meeting to discuss the Cryptocurrency Market Structure Act is scheduled for Tuesday at the White House. The meeting could introduce new elements to regulatory expectations and could impact market sentiment.
Overall, a combination of low inflation, monetary policy expectations, and a wealth of economic data keep investors wary. For Bitcoin and financial markets in general, the coming weeks could be decisive in determining whether the recent rally manages to take root or whether caution prevails until there is more clarity on the direction of interest rates.
