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Crypto Rally Doesn't Hold After Soft Inflation Data
Bitcoin managed a knee-jerk move above $84,000 after the U.S. CPI report, but returned to roughly flat for the day.
Updated Mar 13, 2025, 1:21 p.m. Published Mar 12, 2025, 8:32 p.m.
What to know:
- Bitcoin was trading at $82,800 at press time, down modestly from 24 hours ago.
- Ether was a notable underperformer in crypto, dropping 3.5% to $1,880; the ETH/BTC ratio has plunged 67% since its November 2021 high.
- Traders are expecting the Fed to resume with rate cuts this year, but the timing and extent of the easing remains in question.
The crypto sector was mostly flat for the day, as a short rally following better than hoped U.S. inflation data quickly lost steam.
Bitcoin is trading at $82,800, down 0.5% in the last 24 hours. The CoinDesk 20 — an index of the top 20 cryptocurrencies excluding exchange coins, stablecoins and memecoins — is lower by 0.8% in the same period of time.
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Pulling that broader gauge lower was ether is the worst performing asset in the index and currently off 3.5% to roughly $1,880. At 0.022, the ETH/BTC ratio is now at the same level as it was in April 2020, right before DeFi summer brought projects such as Uniswap and MakerDao into the spotlight. The ETH/BTC ratio has plunged a staggering 67% since its all-time high in November 2021.
Read more: Inflation Relief as U.S. CPI Dips to Less Than Forecast 2.8% in February
“Today's lower-than-expected CPI should be bullish, signaling faster rate cuts, but crypto hasn't reacted strongly," Dr. Youwei Yang, Chief Economist at BIT Mining, told CoinDesk by email. "Weeks of market fear require more than a single good print to regain confidence."
“The real issue is Trump’s aggressive tariffs, which risk making inflation stickier while also crashing markets,” Yang added, also mentioning the layoffs initiated by the Department of Government Efficiency (DOGE). “This puts the Fed in a bind: High inflation from tariffs makes rate cuts harder. Market crashes and job losses pressure the Fed to cut rates sooner. Cutting too early could reignite inflation, making future policy tougher.”
The market currently expects the Federal Reserve to restart rate cuts, perhaps as soon as May or June, with the possibility of as many of 100 basis points in cuts by October.
U.S. stocks enjoyed a modest bounce on Wednesday after a roughly 10% plunge over the past few weeks. The Nasdaq closed with a 1.2% advance while the S&P 500 managed a 0.5% gain.
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Bitcoin’s Deep Correction Sets Stage for December Rebound, Says K33 Research
K33 Research says market fear is outweighing fundamentals as bitcoin nears key levels. December could offer an entry point for bold investors.
What to know:
- K33 Research says bitcoin’s steep correction shows signs of bottoming, with December potentially marking a turning point.
- The firm has argued that the market is overreacting to long-term risks while ignoring near-term signals of strength, like low leverage and solid support levels.
- With likely policy shifts ahead and cautious positioning in futures, K33 sees more upside potential than risk of another major collapse.
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