Bitcoin Stalls Amidst Trade Tensions Despite Lower-than-Expected U.S. Inflation Rate

The most recent inflation figures from the United States were lower than anticipated, but Bitcoin had difficulty maintaining its gains as concerns about trade conflicts weighed down the market.

On Mar. 12, the latest economic data showed that the Consumer Price Index (CPI) for February increased by 2.8%, which is below the projected 2.9%. The Core CPI, which excludes food and energy, decreased to 3.1%, slightly better than the anticipated 3.2%.

The markets reacted by increasing their bets on rate cuts by the Federal Reserve. Traders now believe there is a 31.4% probability of a rate reduction in May, up from just 9% the previous month. The likelihood of three cuts by the end of the year increased to 32.5%, while expectations for four cuts surged from 1% to 21%.

Despite the lower inflation data, Bitcoin (BTC) briefly surpassed $84,000 before falling back to $83,000, erasing the majority of its post-CPI gains. Equities were unable to maintain their early gains, and other financial markets also performed poorly. Analysts identify ongoing trade tensions as a key factor in limiting risk appetite.

In response to U.S. steel and aluminum tariffs, Canada recently imposed $21 billion in tariffs on U.S. exports. The European Union then added tariffs on American goods valued at $28 billion. There is growing concern that escalating trade disputes may exacerbate inflationary pressures and complicate the decision-making of the Federal Reserve.

According to The Kobeissi Letter, the U.S. faces a $9.2 trillion debt refinancing challenge in 2025. Without lower interest rates, borrowing costs could rise significantly, further straining the national debt, which now exceeds $36 trillion. The uncertainty in the market remains high, with investors closely monitoring developments in both monetary policy and global trade.

On-chain data, meanwhile, suggests that cryptocurrency traders are losing confidence. Santiment reports that crypto-wide trading activity has been declining since its peak in late February.

Over the last two weeks, market capitalization losses have left traders hesitant, with signs of exhaustion and capitulation becoming increasingly apparent. Even Bitcoin's CPI-driven bounce failed to generate any significant increase in trading activity.

This type of volume decrease typically indicates weak market momentum during small price recoveries. In the absence of strong buying interest, gains can rapidly disappear, leaving prices vulnerable to further declines.

Retail and institutional traders appear to be in a holding pattern at the moment, waiting for the other to make a move. Until volume picks up significantly, caution is likely to prevail.