Cryptocurrency Markets Stable Amid Cooling Inflation, Trump's Tariffs Cause Market Uncertainty

The rate of inflation showed a larger than anticipated decrease in February, potentially bringing the Federal Reserve closer to lowering interest rates. However, the crypto market displayed little reaction to this optimistic economic indicator.

According to the Consumer Price Index report released on Wednesday, inflation decreased to 2.8% over the past 12 months, falling from 3% in January and marginally surpassing the 2.9% prediction made by economists.

Cryptocurrency prices, however, remained unaffected. Bitcoin (BTC) was trading at $82,770.45 late Wednesday afternoon, exhibiting negligible change over the previous 24 hours. The total value of the crypto market stood at $2.68 trillion, marking a 0.25% decline over the past day.

Dr. Yang: 'Tariffs could cause inflation to persist'

Dr. Youwei Yang, Chief Economist at BIT Mining, a company listed on the NYSE, stated in a declaration obtained by crypto.news that the subdued market response is indicative of deeper concerns about policy risks, particularly those arising from President Trump's new trade tariffs.

"Today's lower-than-expected CPI should be positive, indicating quicker rate reductions, but the crypto market hasn't reacted significantly," Yang said. "It takes more than a single positive report to restore confidence after weeks of market fear."

Yang drew attention to Trump's forceful tariffs on steel and aluminum, which came into effect on Wednesday, as a potential obstacle for inflation and market stability. These tariffs have already prompted retaliatory measures from Europe on $28 billion worth of U.S. goods, scheduled to commence in April.

"The real challenge is Trump's forceful tariffs, which risk causing inflation to persist while also causing market crashes and job losses, particularly within the Department of Government Efficiency (DOGE)," Yang explained.

This puts the Federal Reserve in a difficult position. "High inflation due to tariffs makes rate reductions more difficult," Yang said. "But market crashes and job losses pressure the Fed to lower rates sooner. Cutting rates too soon could lead to renewed inflation, making future policy more challenging."

Crypto markets seek clearer policy indications

Yang noted that uncertainty about future policy direction is causing crypto markets to hold back.

"Investors are looking for stronger support from the White House or Fed, especially after last week's crypto summit failed to reassure markets," he said.

The recent crypto summit at the White House, which gathered industry leaders and government representatives, was expected to provide more favorable guidelines on crypto regulations. However, the lack of concrete results left markets uncertain about the administration's stance on crypto.

"Until clearer signals emerge, fear and uncertainty will continue to affect crypto market sentiment," Yang concluded.