If the government confirms this data, interest rates are likely to be cut. Low interest rates are beneficial for the price of bitcoin. The consumer price index (CPI) in the United States fell to 0.68%, as measured by the independent agency Truflation. This is a new annual minimum for this inflation indicator. This record fuels expectations of new interest rate cuts that boost financial markets, including bitcoin (BTC) and cryptocurrencies. The main factor behind the estimated decrease in the CPI is the drop of around 20% in natural gas prices paid by residential consumers. This adjustment does not occur immediately, as utilities purchase gas at wholesale centers or under contract and household prices are adjusted later due to regulatory factors and billing cycles. The data It comes at a time of sensitivity for investors who are looking for clear signals about the direction of the economy. A more contained inflation environment is often interpreted as a necessary condition for the Federal Reserve (FED) to begin reducing interest rates, which has historically favored risk-taking in assets such as cryptocurrencies.
Inflation is estimated to continue falling in the United States, according to independent data. Source: Truflation. When inflation declines on a sustained basis, it reflects the possibility of lower consumption in the economy and a larger gap in interest rates that could suffocate the economy. Therefore, central banks usually respond to this behavior by cutting them, which reduces the cost of borrowing and prevents an economic slowdown. Consequently, this produces greater liquidity that can enter the markets, which is why assets like bitcoin tend to benefit from this practice.
Expectations of interest cuts in the year
The possibility of a more flexible monetary policy is enhanced by the change of direction of the Federal Reserve provided. Jerome Powell’s term ends on May 15, 2026. The director nominee, Kevin Warsh, is expected to replace him if approved and reduce interest rates, in line with the urging of US President Donald Trump. The next definition of rates is scheduled for March 18. Until then, markets could remain cautious, waiting for a clear signal. According to the CME survey, there is an 80% chance that rates will remain unchanged in the range of 350 to 375 basis points in the next decision. The rest predict a cut of 25 points. In this sense, the possibility of cuts is not seen until later in the year.
Interest rates would not fall in the next FED decision, but later. Source: CME.
Tension in the bitcoin market
The price of bitcoin has had a sharp declineespecially the last week when it hit $60,000, its lowest in more than a year. Although, it then rebounded to around $70,000, showing that the lower zone has revived demand. Even so, this movement has not been enough to reverse the accumulated damage. Now trading at $68,000, bitcoin is 45% below its all-time high of $126,000 set in October. In addition, the decline erased the gains made during the bullish cycle that ran from 2023 to 2025.
BTC experienced a slight recovery after its sharp drop. Source: TradingView. On Friday the 13th, the official CPI data from the United States will be published, which could generate volatility in the markets and modify expectations about monetary policy. The previous record was 2.7% annually, so any surprise, upward or downward, could have an immediate impact, especially if it goes against the decline estimates. Added to this are other relevant announcements during the week, as reported by BitcoinDynamic. The unemployment rate will be released on Wednesday, while initial jobless claims will be released on Thursday. Both data offer signals about the strength of the labor market, a key factor for the FED’s decisions. In parallel, a meeting is scheduled for Tuesday at the White House to address the cryptocurrency market structure bill. This meeting could introduce an additional component of regulatory expectation, with possible effects on market sentiment. Overall, the combination of low inflation, monetary policy expectations and an agenda full of economic data keeps investors on their toes. For bitcoin and financial markets in general, the coming weeks could be decisive in defining whether the recent rebound manages to consolidate or if caution prevails until we have more clarity about the direction of interest rates.
