Bitcoin Rises Over 3% as US February CPI Comes in Lower Than Expected

According to the latest report from the Bureau of Labor Statistics, the February inflation in the United States was lower than expected, which has created a positive effect on the financial market and caused significant movements in the value of assets such as Bitcoin. Specifically, the consumer price index (CPI) only increased by 0.2% in February, lower than the expected 0.3% and a sharp decrease from the 0.5% growth in January. This has made investors optimistic about the possibility of the Federal Reserve (Fed) cutting interest rates in the near future, especially during central bank meetings this summer. CPI Continues to Decrease The latest CPI data shows that the overall consumer prices in the United States only increased by 2.8% compared to the same period last year, lower than the forecast of 2.9% and 3.0% in January. This is a positive sign for the economy, indicating that inflation may be trending down towards the Fed's expectations. In particular, the core CPI index, excluding volatile factors such as food and energy, also only increased by 0.2% in February compared to the expected 0.3% and the 0.4% increase in January. Compared to the same period last year, the core CPI is currently at 3.1%, lower than the forecast of 3.2% and 3.3% in January.

Immediately after the data was released, the financial market reacted strongly. The price of Bitcoin increased by more than 3.4%, surpassing the $84,000 mark. Nasdaq 100 futures also recorded a 1.5% increase. However, traditional markets such as bonds, the dollar, and gold remained relatively unchanged in the short term.

An important factor is that before the data is released, the market has predicted a high probability of (85%) Fed making one or more interest rate cuts in June. These forecasts stem from inflation remaining above the Fed's 2% target for some time. However, after the latest CPI data, investors' outlook has become more positive, also increasing expectations that the Fed will take interest rate-cutting actions this summer to support the economy. Bitcoin and other cryptocurrencies have experienced significant volatility in recent weeks due to concerns about economic downturn and prolonged inflation. Despite Bitcoin's previous sharp increase, worries about a potential downturn may have caused a substantial drop in the cryptocurrency's price. In particular, in early March, Bitcoin dropped by about 30% from its record high reached just before President Trump's inauguration in January, when the price hit $109,000. However, with information from the CPI data in February, investors now have reason to be more optimistic about the short-term prospects of Bitcoin and other risky assets. The decrease in inflation will create a favorable environment for interest rate cuts, which could generate a new wave of money flowing into assets such as Bitcoin. Before making any official decisions, the Federal Reserve will need to monitor additional important economic indicators in the coming months. An important report will be released on Thursday, the Producer Price Index (PPI), which may provide further information on inflation trends and its impact on Fed policy. Traders will continue to closely monitor this data as it could determine the future direction of monetary policy decisions.