In brief
- Bitcoin remained relatively flat after April’s inflation data showed prices rose 0.2% for the month, with the annual inflation rate slowing to 2.3%, while core inflation held steady at 2.8%.
- The Federal Reserve recently kept interest rates at 4.25%-4.50% amid economic uncertainty created by Trump’s tariff policies, with markets now showing just a 15% chance of a June rate cut.
- The US and China reached a surprise trade agreement on May 12, reducing mutual tariffs for 90 days, which boosted equities markets but had limited impact on Bitcoin, which traded around $103,798.
Bitcoin was flat Tuesday after new inflation data showed price growth in the U.S. held steady in April, offering no clear relief for markets watching the Federal Reserve’s next move.
At the same time, Washington and Beijing agreed Monday to slash some of the harshest tariffs imposed this year, another curveball for forecasters trying to read inflation’s path forward.
The consumer price index, a broad gauge of goods and services costs across the U.S. economy, rose 0.2% in April on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics said Tuesday.
That marked a reversal from March, when prices fell 0.1%. Over the last 12 months, the index rose 2.3%, down from 2.4% in March and the slowest annual gain since February 2021.
Excluding food and energy, core inflation increased 0.2% for the month, matching economist expectations. The core CPI held steady at a 2.8% annual rate, unchanged from March.
Economists expected the index, which tracks price changes across a broad range of goods and services, to rise 2.4% from a year earlier.
BTC, which had surged over 10% last week, was trading around $101,758 on Tuesday morning, rose briefly, and has now fallen 0.3% to $103,798, as per CoinGecko data.
Ethereum rose 0.5%, Solana dropped only 0.1%, and meme coins like Dogecoin and Shiba Inu were flat in the wake of the new CPI report.
Traders and economists are now looking ahead to Thursday’s Producer Price Index and May 30’s PCE reading.
Will this sway the Fed?
The inflation report arrives just days after the Fed kept interest rates on hold, citing economic uncertainty driven by President Trump’s tariff hikes.
At last Wednesday’s meeting, the central bank left its benchmark rate at 4.25%-4.50% for a fourth straight time, ignoring weeks of public pressure from Trump to slash rates.
“The tariff increases announced so far have been significantly larger than anticipated,” Fed Chair Jerome Powell said in his post-meeting press conference. “All these policies are still evolving, and their effects on the economy remain highly uncertain.”
Still, Powell rejected the idea that politics was shaping the Fed’s response. “We’re always going to do the same thing… use our tools to foster maximum employment and price stability,” he said.
But markets remain volatile, and as of Tuesday, CME FedWatch showed just a 15% chance of a rate cut in June, down from 34% earlier this month.
The April report follows weeks of economic volatility. U.S. equities posted their best daily performance since early April on news of a surprise trade truce.
Trade war deescalation
On May 12, the U.S. and China agreed to slash mutual tariffs for 90 days, undoing part of the “Liberation Day” measures announced by President Trump.
The U.S. rolled back import levies on Chinese goods from 125% to 30%, while China lowered its retaliatory tariffs from 145% to 10%.
Treasury Secretary Scott Bessent is scheduled to meet Chinese officials in Switzerland this week to discuss next steps.
Markets took the détente as a positive sign. U.S. equities rallied Monday, with the S&P 500 posting its biggest gain in over a month.
Analysts say Bitcoin’s next move hinges less on inflation alone, and more on how the macro picture changes.
“If CPI came in hot, I expected a sharp drop, maybe toward $100K,” Arthur Azizov, founder of B2 Ventures, told Decrypt.
Azizov cautioned against interpreting Bitcoin’s resilience as complacency, noting the asset “has begun behaving more like a macro instrument” as institutional inflows deepen, distancing it from its reputation as a purely speculative, risk-on trade.
He said a break below $93,000 with consolidation could lead to a drop toward $88,000, while a clean move above its all-time high could open the door to “the next big range between $124,000 and $134,000.”
Aurelie Barthere, Principal Analyst at onchain analytics platform Nansen, shared with Decrypt that inflation isn’t the only data point that matters.
“Yes, we’ve already priced out one rate cut,” she said, “but April also saw a bounce in risk appetite driven by the U.S.-China reset and strong labor data. Unless core CPI jumps above 2.9%, I don’t expect a hard reversal in crypto.”
She also noted “supercore” services excluding housing had dropped to a 4-year low of 2.9% in March, hinting at softness under the surface.
“That’s the metric the Fed is watching closely,” Barthere said. “Energy remains disinflationary. The real risk is if services inflation re-accelerates.”
Edited by Stacy Elliott.
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