Bitcoin traders showed a measured response to the latest inflation figures, as the world’s largest cryptocurrency hovered near $81,800 following the release of March CPI data.

The cryptocurrency market continues to weigh multiple economic factors while processing recent policy shifts.

The US Bureau of Labor Statistics reported that March inflation fell to 2.4% year-over-year, cooling from February’s 2.8% and coming in below expert predictions of 2.5%.

On a monthly basis, headline CPI actually declined by 0.1%, contrary to economists’ expectations of a slight increase.

Core inflation, which excludes food and energy, rose by just 0.1% for the month, marking a slowdown from February’s 0.2% and falling well short of the 0.3% forecast.

Year-over-year core inflation registered at 2.8%, down from February’s 3.1% and below the anticipated 3.0% level.

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Bitcoin
BTC Price

Market Reaction to Economic Data

Bitcoin’s price action has been choppy following the data release. After initially climbing above $82,000, the cryptocurrency has settled into a range-bound pattern as traders digest the implications.

The modest reaction comes just one day after a more dramatic price surge, which saw Bitcoin jump above $80,000 following President Trump’s announcement of a 90-day pause on new tariffs, with the exception of those applied to Chinese goods.

This tariff pause provided welcome relief to crypto markets, which had been under pressure from concerns about potential trade restrictions and their economic impact.

Bitcoin’s price performance reflects the complex interplay between inflation data, monetary policy expectations, and recent political developments.

Trading volumes increased as market participants positioned themselves based on the new information, though without dramatic price swings in either direction.

Federal Reserve Policy Outlook

The cooler-than-expected inflation readings have renewed speculation about the Federal Reserve’s next moves, though not as decisively as some might have expected.

According to data from CME FedWatch, the likelihood of a May interest rate cut has fallen from 57% to just 15% in recent days, influenced by both the tariff pause and the release of March FOMC meeting minutes.

Market participants now view June as the more likely timing for monetary policy adjustments, with a 75% probability of at least a 25-basis-point cut by the conclusion of that meeting.

The relationship between inflation and Bitcoin prices stems from the cryptocurrency’s position as both a risk asset and a potential hedge against currency devaluation.

When inflation runs hot, the Federal Reserve typically responds with higher interest rates, which can strengthen the dollar and make Bitcoin less attractive as an investment alternative.

Conversely, when inflation cools, as seen in the March data, it may create conditions for more accommodative monetary policy, potentially boosting Bitcoin’s appeal.

Technical Analysis and Market Structure

From a technical perspective, Bitcoin appears to be consolidating within a defined range, with strong support around $75,000.

The cryptocurrency faces resistance near $85,000, where both the 50-day and 200-day exponential moving averages are converging, potentially forming what traders refer to as a “death cross.”

While some technical analysts view this pattern with concern, others note that such signals have historically produced mixed results and sometimes function as contrary indicators.

Short-term traders have been taking profits after Wednesday’s rally, contributing to Thursday’s slight pullback.

Market sentiment remains cautiously optimistic, though traders are waiting for clearer signals before committing to larger positions.

Looking Ahead

The cryptocurrency market’s attention now turns to Friday’s Producer Price Index (PPI) report, which will provide additional context on inflation pressures at the wholesale level.

This data could further shape expectations regarding the Federal Reserve’s approach in the coming months.

It’s worth noting that Thursday’s CPI figures reflect economic conditions prior to last week’s initial tariff announcements, which briefly sent markets into a downward spiral before the 90-day pause was declared.

The full impact of these policy shifts may take time to materialize in economic data.

For Bitcoin to break decisively above its current range and challenge the $90,000 level, traders would likely need to see continued positive economic news coupled with signals of a more dovish Fed stance.

Until then, the cryptocurrency may continue to trade within its established boundaries, responding incrementally to economic releases and policy developments.

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