Bitcoin Nears $70,000 as U.S. Inflation Stabilizes... "No Halt to Rate Cuts"

▲ U.S. Dollar (USD), Bitcoin (BTC)

The U.S. Consumer Price Index (CPI) recorded its lowest level in four years, coming in below market expectations, fueling expectations of a Federal Reserve rate cut and pushing Bitcoin above the $67,000 level.

According to cryptocurrency-focused outlet CoinGape on February 14 (local time), the Bureau of Labor Statistics reported that January’s CPI rose 2.4% year-over-year, below the market forecast of 2.5%. This marked the lowest reading in about four years and is interpreted as a strong signal that inflation is steadily moving toward the Federal Reserve’s 2% target. On a month-over-month basis, the index increased 0.2%, also below the expected 0.3%.

Core CPI, which excludes volatile energy and food prices, rose 2.5% year-over-year and 0.3% month-over-month, in line with market expectations. The latest data came in lower than December’s figures, aligning with Wall Street’s optimistic outlook for easing inflation. Bitcoin (BTC) reacted immediately to the release, briefly surging to $67,500 and currently trading near $67,000, up more than 1% from the previous day.

The decline in inflation figures is acting as a positive catalyst for the broader digital asset market. Market participants expect the data to support additional rate cuts by the Federal Reserve and are increasing their bets on the number of cuts this year. In particular, Cleveland Fed President Beth Hammack and Dallas Fed President Lorie Logan had recently suggested the possibility of pausing rate cuts due to concerns about a potential rebound in inflation. The latest figures are likely to serve as strong counterarguments to those concerns.

Although robust labor market data released recently had dampened expectations of rate cuts, confirmation of stabilizing CPI has revived investor sentiment. Traders believe the Federal Reserve will place greater weight on price stability indicators rather than employment data and are building aggressive long positions. Bitcoin’s price rise appears to reflect easing macroeconomic uncertainty combined with expectations of expanded liquidity.

As U.S. price indicators trace a stable downward path, digital assets are once again proving their appeal as risk assets. The Federal Open Market Committee’s (FOMC) upcoming monetary policy decisions are expected to serve as a key variable determining the market’s long-term direction.

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