Bitcoin Has Surged to Over $84,000

Bitcoin has surged to over $84000, reflecting a positive market response to the recent U.S. inflation data for February 2025

U.S. inflation rose less than expected in February 2025, data showed on Tuesday, putting pressure on the Federal Reserve to keep interest rates at current levels for longer and offering some relief for battered risk assets like Bitcoin.

The Consumer Price Index (CPI) increased by 2.8% in the 12 months to February, government data showed. Economists polled by Reuters had expected a 2.9% rise in headline inflation and a 3.2% increase in the core CPI, which excludes volatile food and energy prices.

The CPI had risen by 3% in January, while the core CPI advanced by 3.3% last month.

The smaller-than-expected inflation print comes at a time when global markets are still trying to gauge the economic impact of inflation and interest rate decisions.

The modest increase in the CPI and the core CPI were also largely in line with expectations.

The Federal Reserve has increased interest rates aggressively in the past year to try to cool demand and bring down inflation toward its 2% target. The central bank is expected to keep its benchmark overnight rates in a range of 4.25% to 4.5% during the March 19-20 Federal Open Market Committee meeting.

However, the cooler inflation numbers have fueled optimism about the possibility of rate cuts in the months following.

The FedWatch Tool showed on Tuesday morning that traders had no chance priced in for a quarter-point interest rate cut at the May 1-2, 2025, meeting. It showed a 32% chance of a rate cut at the June 17-18 meeting and a 76% chance of a cut at the July 16-17 meeting.

If these cuts materialize, it could lead to a more favorable environment for cryptocurrencies like Bitcoin, as lower rates typically boost investment in risk assets.

The latest data and the expectations of interest rate cuts come as economists continue to warn of a potential recession later this year, in part due to President Donald Trump’s tariff policies. A recession could trigger more capital inflows into risk assets like Bitcoin as investors seek higher returns outside traditional markets.

Bitcoin’s price movements have been directly influenced by these macroeconomic factors, with the cooling inflation offering a brief reprieve for the asset.

The cryptocurrency’s surge above $84,000 is a significant milestone and it signals growing confidence in digital assets, especially with inflation seemingly under control for the time being.