Bitcoin Struggles Despite Lower-Than-Expected U.S CPI Data Amid Trade War Concerns

According to the most recent economic data issued on March 12, the Consumer Price Index climbed 2.8% in February, falling short of the expected 2.9%. Core CPI, which excludes food and energy, fell to 3.1%, slightly above the predicted 3.2%. 

The market responded by increasing bets on Federal Reserve rate cuts. Traders now predict a 31.4% chance of a cut in May, up from just 9% last month. The possibility of three cuts by the end of the year has increased to 32.5%, while projections of four cuts have risen from 1% to 21%. Bitcoin 1.51 percent. Bitcoin quickly exceeded $84,000 before dropping back to $83,000, wiping off the majority of its post-CPI gains despite lower inflation figures. Equities struggled to maintain early gains, and other financial markets also suffered. Analysts see persistent trade tensions as a major factor limiting risk appetite. 

Canada replied to US steel and aluminium tariffs by imposing $21 billion in levies on US exports. The European Union then levied further duties on American goods worth $28 billion. There is considerable concern that rising trade tensions may increase inflationary pressures and complicate Federal Reserve decision-making. 

According to The Kobeissi Letter, the United States faces a $9.2 trillion debt refinancing issue by 2025. Without reduced interest rates, borrowing costs might skyrocket, burdening the nation’s $36 trillion debt. Market uncertainty is high, with investors closely monitoring changes in monetary policy and global trade. 

Meanwhile, on-chain data show that cryptocurrency traders are losing trust. Sentiment reports that cryptocurrency trading activity has been dropping since its high in late February.

Over the last two weeks, market capitalization losses have left traders cautious, with symptoms of fatigue and capitulation emerging. Even Bitcoin’s CPI-driven rebound failed to generate any significant increase in trading activity. 

This type of volume fall is often associated with weak market momentum and limited price recoveries. Gains can quickly fade without robust purchasing activity, leaving prices vulnerable to additional losses.

Retail and institutional traders appear to be in a holding pattern, waiting for each other to move. Until volume increases considerably, caution is likely to prevail.

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