Recent inflation figures from the U.S. were lower than anticipated, yet Bitcoin struggled to hold onto its earlier gains as anxiety over trade disputes influenced market sentiment.
On March 12, the latest economic data revealed that February’s Consumer Price Index (CPI) increased by 2.8%, slightly below the anticipated 2.9%. The core CPI, which excludes food and energy prices, fell to 3.1%, a small improvement from the expected 3.2%.
In response, markets ramped up their expectations for potential interest rate cuts from the Federal Reserve. Traders are now estimating a 31.4% likelihood of a cut in May, a notable rise from just 9% the previous month. The chance of three cuts by the end of the year has increased to 32.5%, while those predicting four cuts rose significantly from 1% to 21%.
Bitcoin (BTC) momentarily crossed the $84,000 mark but then retreated to around $83,000, erasing most of its post-CPI gains, even with the more favorable inflation data. Stock markets also failed to hold onto their initial gains, with other financial sectors experiencing declines. Analysts cite ongoing trade tensions as a significant factor dampening risk appetite.
In response to U.S. tariffs on steel and aluminum, Canada implemented $21 billion in tariffs on American goods. Additionally, the European Union levied further tariffs on U.S. products amounting to $28 billion. There are increasing worries that escalating trade disputes could heighten inflationary pressures and complicate decision-making for the Federal Reserve.
According to a financial analysis, the U.S. is faced with a $9.2 trillion debt refinancing challenge in 2025. Without interest rate reductions, borrowing costs could rise significantly, adding pressure to a national debt that has now surpassed $36 trillion. Market uncertainty remains elevated, with investors closely monitoring changes in monetary policy and global trade dynamics.
Meanwhile, blockchain data suggests that confidence among cryptocurrency traders is waning. Metrics from various platforms indicate that trading activity across the crypto space has been on the decline since late February, signaling reduced engagement among traders.
Over the past two weeks, losses in market capitalization have left traders feeling cautious, with signs of fatigue and capitulation becoming apparent. Even the rebound in Bitcoin following the CPI announcement did little to revive trading activity meaningfully.
This decline in trading volume typically suggests weak market momentum amid minor price recoveries. Without strong buying pressure, gains can quickly dissipate, leaving prices vulnerable to further declines.
Currently, both retail and institutional traders seem to be in a wait-and-see mode, holding back as they look for the other side to make a move. Unless trading volume increases significantly, a cautious approach is likely to prevail.