Cryptocurrency Gains Fail to Sustain After Weak Inflation Data
Following the release of the US Consumer Price Index report, Bitcoin managed to rise sharply above $84,000, but by the end of the day it had returned to a virtually unchanged level.
Tom Carreras | Edited by Steven Alpher Updated Mar 13, 2025 1:21 PM UTC Published Mar 12, 2025 8:32 PM UTC
What you need to know:
- At the time of writing, Bitcoin was trading at $82,800, down slightly from 24 hours ago.
- Ethereum was the worst performer among cryptocurrencies, falling 3.5% to $1,880; the ETH/BTC ratio is down 67% from its November 2021 peak.
- Traders expect the Fed to resume rate cuts this year, but the timing and extent of the easing remain uncertain.
The crypto market remained mostly stable on the day as short-term gains following better-than-expected US inflation data quickly faded.
Bitcoin (BTC) is trading at $82,800, down 0.5% over the past 24 hours. The CoinDesk 20 — an index of the 20 largest cryptocurrencies excluding exchange-traded coins, stablecoins, and memecoins — is down 0.8% over the same period.
Ether (ETH), dragging down the broader index, is currently the worst-performing asset, down 3.5% to around $1,880. At 0.022, ETH/BTC is now at a level similar to April 2020, before the DeFi summer brought attention to projects like Uniswap and MakerDao. The ratio has fallen a staggering 67% since its all-time high in November 2021.
Read more: Inflation eases as US CPI falls to less than forecast 2.8% in February
“Today’s lower-than-expected CPI should be encouraging, pointing to faster rate cuts, but the crypto market has not responded strongly,” Dr. Yuwei Yang, chief economist at BIT Mining, told CoinDesk via email. “The lack of confidence in the market requires more than one good report to restore confidence.”
“The big problem is Trump’s aggressive tariffs, which could worsen inflation and derail markets,” Young added, also citing layoffs initiated by the Department of Government Efficiency (DOGE). “This puts the Fed in a difficult position: High inflation due to tariffs makes it difficult to cut rates. Market crashes and job losses force the Fed to cut rates faster. Cutting too soon could lead to inflation again, complicating future policy.”
The market now expects the Federal Reserve to resume rate cuts, possibly as early as May or June, with the cut potentially reaching 100 basis points by October.
U.S. stocks posted modest gains Wednesday after falling about 10% in recent weeks. The Nasdaq closed up 1.2%, while the S&P 500 rose 0.5%.
