Bitcoin, Ethereum, and various cryptocurrencies experienced a surge following the latest U.S. inflation report, which revealed a smaller-than-anticipated increase. The Consumer Price Index (CPI) for March rose by 2.4% year-on-year, below the expected 2.6%. Core CPI, excluding volatile food and energy prices, also saw a decrease, moving from 3.1% in February to 2.8%. This inflation data brought relief to the market, leading to a rise in the value of crypto assets like Bitcoin, which hit $82,000, a 7.5% increase. Ethereum and Solana also saw gains, with Ethereum reaching $1,600 and Solana climbing by 11% to approximately $114.
Earlier, President Donald Trump opted to postpone tariff hikes for 90 days, reducing trade uncertainties. Trump had previously imposed higher tariffs on Chinese goods and raised tariffs on foreign cars and auto parts, causing concerns about escalating trade tensions. The delay in some tariffs received a positive market response, easing fears of an economic slowdown.
Nevertheless, Trump maintained a tough stance on trade by increasing tariffs on Chinese imports to 125%. The Federal Reserve remains vigilant about inflation and tariff effects. Even though inflation has decreased, it still exceeds the Fed's 2% target, with the latest data showing a second consecutive month of declining inflation and core inflation.
The decrease in inflation has fostered optimism in the market. Investors are hopeful that lower inflation might prompt the Federal Reserve to adopt a more accommodative approach, possibly including interest rate cuts. Analysts are closely monitoring forthcoming CPI reports to gauge how tariffs may impact inflation in the future.
March's inflation report revealed a substantial decline in inflation despite the tariff increase. This has provided a sense of relief to the markets, with hopes that the Federal Reserve may alter its policies to offset economic pressures. The halt in certain tariffs, combined with the better-than-expected inflation figures, has offered support to equities and cryptocurrencies.
Bitcoin's price hit $82,000, marking a 7.5% rise, while Ethereum saw an 11% increase. The broader market displayed positive movement following the inflation report, with the Federal Reserve's response still ambiguous but being closely watched. The latest data indicates a possible shift in inflation trends, amid ongoing trade tensions with China that are influencing market sentiment.