Bitcoin Surges 2% to $84,000 on Lower Inflation Data

Bitcoin experienced a notable surge on Wednesday, breaching the $84,000 mark. This rally was sparked by the release of new inflation data, which showed that consumer prices rose less than expected in February. The annual Consumer Price Index (CPI) decreased to 2.8% from the previous 3%, alleviating concerns about aggressive monetary policy tightening by the Federal Reserve. This softer inflation reading brought the rate closer to the Fed’s 2% target, a critical threshold that could influence future interest rate decisions.

However, the cryptocurrency's gains were short-lived. Bitcoin briefly surpassed $84,000 before falling back to $83,000, erasing most of its post-inflation data gains. This volatility underscores the ongoing uncertainty in the market, as investors navigate the potential impact of future economic data and policy changes.

Earlier in the day, Bitcoin was trading steadily at $82,700, recovering from its recent drop below the 200-day Exponential Moving Average (EMA) at $85,664 on Sunday. The cryptocurrency fell 9.14% in a single day, finding support at $78,258 before rebounding 5.52% on Tuesday. This price action highlights Bitcoin's sensitivity to macroeconomic developments and investor sentiment.

Despite the rally, uncertainty over global trade tensions and Fed policy continues to influence market sentiment. The latest report indicated a mixed macroeconomic backdrop, with steady job growth, rising wages, and efficiency gains, but also inflationary pressures and cautious business expansion. The US labor market remains robust, with 151,000 jobs added in February, although the unemployment rate ticked up to 4.1% due to government job cuts. While strong wage growth typically supports consumer spending, ongoing inflation concerns could complicate expectations for multiple Fed rate cuts this year.

A cooler inflation print has historically boosted risk assets like cryptocurrencies, as it raises bets on Fed rate cuts. However, aggressive trade policies add another layer of uncertainty, with some investors pivoting towards safe-haven assets like gold rather than speculative markets like crypto. This dynamic underscores the complex interplay between macroeconomic factors and investor behavior in the cryptocurrency market.