U.S. Inflation Drop Fuels 31.4% Rate Cut Hopes, Bitcoin Holds at $83,030.57

The latest U.S. core Consumer Price Index (CPI) report revealed an unexpected decline in inflation, with core CPI coming in at 3.1%, slightly below the projected 3.2%. This surprise has sparked hopes for rate cuts, with market expectations for a May cut jumping to 31.4%, more than tripling from last month. Similarly, forecasts for three rate cuts by year-end have spiked fivefold to 32.5%, while the likelihood of four cuts has surged from a mere 1% to 21%. This rapid shift in investor sentiment has fueled optimism in the crypto markets, particularly for Bitcoin.

Despite the cooling inflation, Bitcoin’s price has struggled to maintain momentum, slipping from over $84,000 to around $83,000. This fluctuation is attributed to traders weighing the impact of broader macroeconomic uncertainty. However, the latest data shows BTC trading at $83,030.57, reflecting a modest gain in the past 24 hours. This suggests that while there is caution, there is also a glimmer of hope for a potential breakout.

Matt Mena, a Crypto Research Strategist, noted that with inflation cooling and recession fears still looming but not worsening, Bitcoin could be on the verge of its next major breakout. A decisive move beyond the sub-$90K range could see BTC testing $95K resistance before making a run toward the highly anticipated $100K mark, solidifying its place in six-digit territory. This optimism is further bolstered by the recognition of Bitcoin as “digital gold” by Federal Reserve Chairman Jerome Powell, which analysts see as a step toward broader acceptance.

However, Federal Reserve officials, including Chairman Jerome Powell and Governor Christopher Waller, have reiterated their cautious stance on rate cuts, signaling no rush to ease policy. This has sparked concern among analysts, who warn that delaying cuts could trigger a bear market. Investor Anthony Pompliano even speculated that President Trump might be deliberately pressuring financial markets to force the Fed into action.

Despite the market uncertainty, the Crypto Fear and Greed Index has plunged to levels not seen since the Terra Luna collapse, reflecting heightened market anxiety. However, shifting narratives suggest a potential turnaround. With expectations of interest rate cuts and monetary expansion, there is a possibility of a much-needed boost to Bitcoin and the broader crypto market, setting the stage for a potential recovery.