Bitcoin sees a mild bump on cooler than expected February 2025 inflation numbers.

Risk markets like crypto are catching another break. Building on the positive news of a U.S.-brokered ceasefire agreement between Ukraine and Russia, we now see cooler-than-expected inflation numbers for February 2025.

Are interest rate cuts coming?

Cooler Than Expected Numbers

Moments ago, Bitcoin, the leading cryptocurrency by market cap, has seen a bit of a jump, lifting its price above $84,500.

Fueling this bump is the release of February 2025 U.S. inflation data, which was surprisingly lower than anticipated across all areas. This is boosting expectations for a ‘dovish turn’ at the Fed, potentially drawing more capital into riskier assets.

Specifically, the annual Consumer Price Index (CPI) came in at 2.8%, marking the lowest level since November 2024. This is below January 2025’s 3% and the anticipated 2.9%.

At the same time, the monthly CPI rate also showed positive news, increasing by just 0.2% in February 2025, the smallest increase since October 2024. Once again, this figure is also lower than January’s 0.5% and the forecasted 0.3%.

Adding to the good news, the Core CPI – which the Fed watches especially closely as it takes out the impact of fluctuating food and energy costs – increased by 3.1% year-over-year, a drop from January’s 3.3% and below the anticipated 3.2%. Notably, this is the lowest reading since April 2021. 

Looking month-over-month, the Core CPI also showed a modest 0.2% increase, again, falling short of the 0.3% projection.

Although most market analysts still anticipate the Fed holding interest rates steady at the 4.25%–4.5% range after the upcoming Federal Open Market Committee (FOMC) meeting on March 19th, this new data could fuel more optimism about possible rate cuts in May and June 2025.

At the time of writing, the FedWatch Tool is showing a 32% likelihood of interest rate cuts in May, and a greater than 76% chance for June.

The growing expectation of rate cuts is further fueled by recent recession worries, partly caused by President Trump’s tariff proposals. Should those recession fears pan out, it could lead to a surge of capital into riskier assets such as Bitcoin, potentially boosting its price further.