Bitcoin Price Remains Stable As US Reports 2,3% Inflation In April

Bitcoin traded flat on Tuesday despite new inflation data showing U.S. price growth held steady in April. The numbers offer no clear clues as markets focus on the Federal Reserve’s next moves. What’s more, Washington and Beijing reached an unexpected agreement Monday to cut some of the toughest tariffs imposed this year, further complicating inflation forecasts.

Inflation and rate data

The consumer price index, a key measure of the cost of goods and services in the U.S. economy, rose 0,2% in April on a seasonally adjusted basis, a reversal from March, when prices fell 0,1%. Over the past year, the index has risen 2,3%, down from 2,4% in March and the slowest annual growth since February 2021.

Excluding volatile food and energy prices, core inflation rose 0,2% in April, in line with economists' expectations. Core CPI held steady at an annual rate of 2,8%, the same as in March. The index that tracks changes in a wide range of goods and services had been expected to rise 2,4% from a year earlier.

Bitcoin, which rose more than 10% last week, was trading around $101.758 on Tuesday morning. After briefly rising, the value has fallen back to $103.798, according to data from CoinGecko. Ethereum rose 0,5%, while Solana only dropped 0,1%. Meme coins such as Dogecoin and Shiba Inu showed no significant changes after the new CPI report.

Traders and economists are now turning their attention to the Producer Price Index to be released next Thursday and the PCE reading on May 30.

Will this affect the Fed?

The inflation report comes just days after the Fed decided to keep interest rates on hold amid economic uncertainty stemming from President Trump’s rate hikes. At Wednesday’s meeting, the central bank left rates unchanged at 4,25%-4,50% for the fourth time in a row, despite public pressure from Trump to cut rates.

Fed Chairman Jerome Powell noted that the announced rate hikes were larger than expected and stressed that the effects of these measures on the economy are still highly uncertain. However, he rejected political influences as an explanation for the Fed's decisions and assured that the focus is on promoting maximum employment and price stability.

Markets remain volatile, however, with the likelihood of a rate cut in June down to just 15%, from 34% earlier this month, according to CME FedWatch. The April report follows weeks of economic turmoil that saw U.S. stock markets post their best daily performance since early April, fueled by news of a surprise trade reconciliation.

De-escalation of the trade war

On May 12, the US and China reached an agreement on a temporary reduction in mutual tariffs for 90 days, reversing some of the “Liberation Day” measures announced earlier by President Trump. The US reduced tariffs on Chinese goods from 125% to 30%, while China reduced its rhetorical tariffs from 145% to 10%.

Markets responded positively to this de-escalation, with the S&P 500 posting its biggest gain in over a month on the news. Bitcoin’s next move, however, will depend less on inflation alone and more on how the broader macroeconomic picture plays out.

Bitcoin’s price movement has become increasingly tied to the macroeconomic situation in recent times, as institutional investments increase. This changes Bitcoin’s dynamics from a purely speculative investment to a financial instrument that is also influenced by broader economic factors.

During these turbulent times, it is important to keep a close eye on developments. Remember that the right movement in the crypto market can sometimes be surprising, like a flag fluctuating on a day with calm skies.

Frequently Asked Questions

What are the latest US inflation figures?
In April, the consumer price index rose by 0,2%, while annual inflation came in at 2,3%, the slowest pace of growth since February 2021.

How has the Federal Reserve responded to the current economic situation?
The Fed has kept rates at 4,25%-4,50% for the past four meetings, citing economic uncertainty stemming from Trump's rate hikes.

What is the Impact of the US-China Trade Deal on Bitcoin?
While it positively impacted multiple markets, Bitcoin's price remains dependent on broader macroeconomic trends and less on inflation rates alone.