Bitcoin’s price stayed relatively flat on Tuesday, as investors digested the latest U.S. inflation report. The Consumer Price Index (CPI), a key measure of inflation, showed prices rose 0.2% in April, in line with expectations. Over the past year, inflation increased by 2.3%, down slightly from 2.4% in March. This marks the slowest annual gain since February 2021 and suggests inflation is gradually cooling.
However, the report brought no strong signals about what the Federal Reserve might do next. Despite slowing inflation, the Fed is still concerned about broader economic uncertainty, especially as global trade tensions shift.
What the Inflation Report Tells Us
The inflation data, released by the U.S. Bureau of Labor Statistics, shows that core inflation—CPI excluding food and energy—also rose 0.2% in April. On a yearly basis, the core CPI held steady at 2.8%, matching March’s numbers and economist forecasts.
This consistency in core inflation shows that while overall prices are cooling, many essential goods and services are still seeing price increases. This is a key reason why the Federal Reserve might be hesitant to cut interest rates too soon.
Bitcoin’s Price Response
Despite the economic news, Bitcoin (BTC) showed little movement. After rising more than 10% last week, BTC briefly climbed early Tuesday but then slipped 0.3% to \$103,798, according to CoinGecko. As of now, Bitcoin is trading within a tight range, showing signs of consolidation. Ethereum (ETH) rose 0.5%, Solana (SOL) dipped 0.1%, and meme coins like Dogecoin and Shiba Inu remained flat.
Crypto traders are closely watching how macroeconomic indicators like inflation, interest rates, and trade policies impact digital asset prices. Many experts say Bitcoin is becoming more like a macroeconomic asset—influenced by broader market forces rather than just investor sentiment or hype.
Federal Reserve Caught in the Middle
Just last week, the Federal Reserve decided to hold interest rates steady at 4.25% to 4.50% for the fourth time in a row. The Fed is trying to balance two things: keeping inflation under control while supporting economic growth.
President Donald Trump has pushed the Fed to lower rates, especially after he announced a wave of tariffs earlier this year. But Fed Chair Jerome Powell emphasized that the central bank won’t be influenced by political pressure.
“The tariff increases announced so far have been significantly larger than anticipated,” Powell said, adding that the Fed’s policies will remain independent and based on long-term goals like maximum employment and price stability.
Trade Truce Between US and China Eases Market Tensions
In a surprise move on May 12, the United States and China announced a temporary truce in their ongoing trade war. Both sides agreed to reduce some of the harsh tariffs they had imposed earlier this year. U.S. tariffs on Chinese imports were cut from 125% to 30%, while China dropped its tariffs from 145% to 10%.
This 90-day tariff rollback has already had an impact. U.S. stock markets jumped, with the S\&P 500 seeing its best day in more than a month. Treasury Secretary Scott Bessent will meet with Chinese officials in Switzerland later this week to negotiate next steps.
The easing of trade tensions is one reason why markets, including the crypto market, have remained stable despite uncertain inflation data. Some economists believe the trade reset could lower import costs, helping to keep inflation in check.
What’s Next for Crypto?
Many traders are now waiting for Thursday’s Producer Price Index (PPI) and the Personal Consumption Expenditures (PCE) report on May 30. These two data points are also watched closely by the Fed and could influence its next move.
Arthur Azizov, founder of B2 Ventures, told Decrypt that Bitcoin’s short-term direction depends on a mix of inflation data and broader economic signals. He warned that if Bitcoin breaks below \$93,000 and stays there, it could fall further to around \$88,000. On the flip side, if Bitcoin climbs past its all-time high, it could enter a new range between \$124,000 and \$134,000.
Meanwhile, Aurelie Barthere, Principal Analyst at Nansen, said that while rate cut expectations have cooled, other factors like labor market strength and the U.S.-China trade reset are boosting investor confidence. She also pointed out that “supercore” services inflation—excluding housing—has dropped to a 4-year low of 2.9%, suggesting some hidden softness in the economy.
“The Fed is watching that metric closely,” she said. “Energy remains disinflationary. The real risk is if services inflation re-accelerates.”
The current economic landscape is complex. Inflation is easing, but not dramatically. Trade tensions are improving, but remain fragile. Bitcoin’s price is holding steady, but could swing depending on how the Fed and global markets react in the coming weeks.
For now, investors are left waiting—watching for clearer signs from inflation reports, the Federal Reserve, and the global economy to decide their next move.
