Bitcoin Gains Momentum on Positive Inflation Data, Tariffs Temper Gains

Bitcoin experienced a notable upward movement on Wednesday, climbing almost 2% to approximately $83,600, as encouraging inflation data injected optimism into the financial markets. The cryptocurrency's positive price action mirrored a similar, though more restrained, upward trend in US stock indices.

While the Nasdaq Composite and S&P 500 closed in positive territory, overall gains remained capped by persistent anxieties surrounding President Trump's escalating tariff policies. Ethereum also saw modest gains, trading around $1,890, with the global cryptocurrency market capitalization increasing by nearly 2% to $2.71 trillion.

The catalyst for Wednesday's market movement was the release of the February Consumer Price Index (CPI), which revealed inflation cooling more than economists had predicted, Reuters reported . Key figures from the Labor Department report showed:

• Headline CPI rose 0.2% month-over-month, below the estimated 0.3% increase.
• Core CPI increased 0.2% month-over-month, also falling short of the 0.3% estimate.
• Headline CPI rose 2.8% year-over-year, again below the projected 2.9%.
• Core CPI increased 3.1% year-over-year, compared to the estimated 3.2%.

These lower-than-expected inflation readings have renewed hopes that the Federal Reserve may consider a less aggressive monetary policy, increasing the probability of interest rate cuts later in the year. The prospect of easing monetary policy generally makes riskier assets, like Bitcoin , more attractive to investors.

The US stock market reacted in kind to the positive inflation data. The tech-heavy Nasdaq Composite outperformed, closing up 1.22%, while the S&P 500 gained 0.49%. However, the Dow Jones Industrial Average edged slightly lower by 0.20%, reflecting persistent anxieties surrounding President Trump's escalating trade policies. Trump's latest threat of tariffs on EU goods added to existing concerns stemming from tariffs already imposed on steel and aluminum imports, which have prompted retaliatory measures from key trading partners like Canada and Europe.

"The February CPI data, showing inflation slightly below expectations across the board, has clearly boosted market sentiment and provided some lift to Bitcoin," BRN analyst Valentin Fournier said. "The lower-than-expected figures suggest that inflationary pressures might be moderating, giving the Federal Reserve more flexibility in its monetary policy decisions. This is being interpreted by the market as a potentially positive environment for risk assets."

Despite the positive CPI surprise, market gains remained limited by the ongoing trade disputes. The threat of escalating tariffs and the potential for a global trade war continue to cast a shadow over the economic outlook, dampening overall investor enthusiasm. As the S&P 500 remains nearly 9% below its recent all-time high, the market remains in a state of correction, navigating conflicting signals from macroeconomic data and geopolitical risks.