Bitcoin and United States stocks climbed on Wednesday after the latest Consumer Price Index (CPI) report showed inflation easing more than expected. The report renewed investor optimism that the Federal Reserve may consider interest rate cuts sooner rather than later, leading to a surge in BTC and other risk assets.
The latest Consumer Price Index (CPI) report from the U.S. Bureau of Labor Statistics revealed that inflation increased by just 0.2% in February on a seasonally adjusted basis. This brought the annual rate down to 2.8%, falling below the anticipated 2.9% and marking a notable slowdown from January’s 0.5% monthly jump.
Meanwhile, the Core CPI, which strips out food and energy costs, also rose by 0.2% for the month, with an annual increase of 3.1%. These figures were slightly lower than the expected 0.3% monthly rise and 3.2% annual rate.
With inflation showing signs of cooling, market expectations for Federal Reserve rate cuts have intensified. A shift in monetary policy could provide a strong boost to both traditional equities and the crypto market, which thrives on liquidity and lower borrowing costs.
Bitcoin leads the charge as risk assets rally
BTC surged nearly 4% on Wednesday, surpassing $83,900 on Thursday morning. This rally aligns with a broader recovery in risk assets, as investors interpret the inflation data as a sign that interest rate cuts may be on the horizon.According to Matt Mena, Crypto Research Strategist at 21Shares, the latest CPI figures support the case for lower rates, sparking enthusiasm in the market.
“Today’s data adds to the case for rate cuts, and risk assets are rallying in response,” Mena said. “Bitcoin has rebounded, retesting $85,000, while index futures push higher. This dynamic suggests that if rate cuts materialize this year, it could unleash a flood of liquidity, propelling equities and crypto higher.”
Mena also noted that BTC is approaching a critical breakout point. With strong momentum, the largest cryptocurrency by market cap could soon test the $95,000 resistance level before potentially making a run toward the highly anticipated $100,000 mark.
Related: Standard Chartered forecasts $500K Bitcoin (BTC) as Trump advances U.S. strategic crypto reserve
Stock market joins the uptrend
The positive sentiment extended beyond crypto, with major U.S. stock indices also posting gains following the inflation report. Investors are increasingly betting that the Federal Reserve will respond to cooling inflation with more accommodative policies, which could provide further support for risk assets.
While the Fed has maintained a cautious stance, emphasizing its data-dependent approach, market participants are growing confident that rate cuts could arrive by mid-year. Coupled with President Donald Trump’s establishment of a Strategic Bitcoin Reserve and a U.S. Digital Assets Stockpile, such a shift would likely fuel further rallies in both traditional and digital assets. Notably, Trump confirmed that the U.S. strategic crypto reserve would include BTC, Ethereum (ETH), Solana (SOL), Cardano (ADA) and XRP.
Nonetheless, BTC’s price movement has remained highly sensitive to macroeconomic developments, with inflation and interest rate expectations playing a crucial role in its trajectory. If inflation continues to ease and the Fed signals a dovish turn, BTC could see further upside.
With analysts eyeing a potential breakout above $90,000, investors are watching closely to see whether this momentum can push BTC toward six figures in the coming months. At the time of writing, BTC is changing hands at $83,260 which translates to a 9.4% price drop in the past seven days.
