Crypto Rally Doesn’t Hold After Soft Inflation Data

“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.