Key Points
- Inflation rate in February was lower than expected, raising hopes for Federal Reserve interest rate cuts.
- Crypto market remained largely unresponsive to this positive economic development.
In February, inflation rates dropped more than anticipated, leading to speculation that the Federal Reserve might be considering reducing interest rates.
Despite this encouraging economic development, the cryptocurrency market did not react significantly.
The Consumer Price Index report released on Wednesday indicated a decrease in inflation to 2.8% over the last year, down from 3% in January and slightly lower than economists’ 2.9% prediction.
Crypto Market’s Muted Response
Interestingly, cryptocurrency prices remained stable. For instance, the price of Bitcoin (BTC) was approximately $82,770.45 late Wednesday afternoon, showing no significant change over the past 24 hours. The total value of the cryptocurrency market was about $2.68 trillion, a slight decrease of 0.25% over the previous day.
Dr. Youwei Yang, Chief Economist at BIT Mining, a company listed on the NYSE, suggested that the lack of market response could be due to concerns about policy risks, particularly those related to President Trump’s new trade tariffs.
Inflation and Tariffs
Yang highlighted the potential risks of Trump’s aggressive tariffs on steel and aluminum, which came into effect on Wednesday. These tariffs have led to retaliatory measures from Europe on $28 billion worth of U.S. goods, scheduled to start in April.
Yang expressed concern that these tariffs could result in persistent inflation, market crashes, and job losses, especially within the Department of Government Efficiency. This situation could put the Federal Reserve in a difficult position.
Crypto Market’s Desire for Policy Clarity
Yang also mentioned that the cryptocurrency market is hesitant due to uncertainty over future policy directions. He stated that investors are seeking stronger support from the White House or Federal Reserve, especially after the recent crypto summit failed to provide market reassurance.
The recent White House crypto summit, which included leading industry figures and government officials, was expected to provide more favorable guidance on crypto regulations. However, the absence of concrete outcomes left markets uncertain about the administration’s stance on cryptocurrency.
Yang concluded by saying that until clearer policy signals are provided, fear and uncertainty will continue to impact the sentiment in the cryptocurrency market.