Bitcoin (BTC) Price Holds Its Breath as CPI Shows Slight Easing of Inflation

While the American consumer price index (CPI) shows a slight easing in inflation, Bitcoin is holding its breath.

The American consumer price index (CPI) has shown a slight easing in inflation in April, with the figure coming in at 3.1%. This is below the expectations of 3.2% and marks a slowdown from the March reading of 3.2%. However, while this news may be seen as positive, it remains to be seen what impact it will have on Bitcoin price predictions, which has seen a slight pullback from $84,000 to $83,000 in recent hours.

As the macroeconomic landscape becomes increasingly crucial for crypto traders, the focus is shifting to the possibility of interest rate cuts by the Federal Reserve.

The Fed, inflation, and Bitcoin: a three-step tango

According to the latest figures from the Bureau of Labor Statistics, the American CPI, a measure of inflation, has slightly weakened to 3.1% in April. This is below the anticipated 3.2% and marks a slowdown from the March reading of 3.2%.

While this news may be seen as positive, it remains to be seen what impact it will have on Bitcoin price predictions, which has seen a slight pullback from $84,000 to $83,000 in just a few hours.

However, according to Matt Mena, a strategist at 21Shares, this slight slowdown could be good news for crypto traders, as it paves the way for interest rate cuts.

Indeed, the market is now placing a 31.4% chance on a cut in May, compared to a meager 10% a month earlier. Moreover, the chances of three cuts by the end of 2025 have quintupled.

An accommodating monetary policy would inject massive liquidity, which is generally favorable for volatile assets like Bitcoin. Historically, periods of interest rate cutting cycles tend to coincide with rallies in the crypto market.

Yet, BTC is currently seeing a downturn, which traders attribute to other pressing concerns, such as Trump’s trade war, geopolitical tensions, and a more cautious timing for the Fed than what investors had anticipated.

Bitcoin is presently hovering around the $83,000 threshold, rendering it susceptible to rapid price swings with any surprising announcements.

Furthermore, Jerome Powell, the head of the Fed, has stated that “it is still too early to declare victory over inflation.”

In a separate statement, Christopher Waller, a governor at the central bank, added: “There is no rush to cut rates.”

As a result, investors are likely to remain on the sidelines, closely monitoring the macroeconomic calendar for any signs of confirmation regarding the easing cycle.

Any indication of an interest rate cut could trigger an unprecedented level of FOMO (fear of missing out), especially considering the massive sums that investors have prepared to pour into the market in anticipation of such a move.

Trump, debt, and the art of manipulating the markets

What if the market crash was… intentional? This is the bold thesis that Anthony Pompliano presents in his analysis of the political and economic factors at play.

According to Pompliano, Trump would be willing to let the indices take a plunge in order to force the hand of the Federal Reserve into slashing interest rates.

Would this be a political failure? Not necessarily. According to the numbers cited by Pompliano, it’s a cold calculation: $9.2 trillion in American debt is due by 2025. Without the possibility of refinancing at low rates, the interest would explode, ultimately destroying the economy.

As the Kobeissi Letter points out, refinancing $36 trillion in debt at a time of high interest rates would have catastrophic consequences. For Trump, an interest rate cut is a desperate necessity—even if it means sacrificing the stock market temporarily.

And the markets are already anticipating this reversal from the Fed, which is prepared for a May cut only if the economic outlook deteriorates. Bitcoin, often viewed as a hedge against monetary drift, could capitalize on this orchestrated chaos.

In this tug-of-war between politics and economics, Bitcoin plays a unique role. It’s neither a traditional asset nor simply speculation; it embodies an alternative to weakened systems.

If the Fed finally yields to the pressure and signals a pivot in policy, the influx of liquidity could propel Bitcoin to new highs, potentially pushing it beyond $100,000 despite a timid rebound.

But in case of prolonged resistance from the central bank and further turbulence ensues, this chaotic scenario will offer buyers an excellent opportunity to accumulate more Bitcoin at bargain prices.