February CPI strikes: Will the downturn in the crypto world be reversed? Or is it adding fuel to the fire?

The U.S. Bureau of Labor Statistics (BLS) is scheduled to release the Consumer Price Index (CPI) for February 2025 tonight. Based on AiCoin data collection and historical trend analysis, the year-on-year growth rate of CPI for February 2025 is expected to be 2.9%, slightly lower than January's 3.0%, but still above the Federal Reserve's long-term target of 2%. This data may maintain current economic stability, but if deviating from expectations, it could trigger significant Fluctuation in the market, even reversing the bullish trend in the crypto market.

The crossroads of benchmark interest rates: seeking stability and change

The current federal funds rate maintained at 4.5% by the Federal Reserve, and decided to keep it unchanged at the Federal Open Market Committee (FOMC) meeting in January 2025, emphasizing in its statement that there is 'no need to rush to adjust policies' (Federal Reserve, 2025). This position reflects the Fed's concerns about the sustainability of inflation, especially against the backdrop of a still strong job market and persistent wage growth pressures.

If the CPI in February 2025 meets the expected 2.9%, the Fed may continue to stand still and wait for more data to confirm whether inflation is truly cooling down. Fed officials like Adriana Kugler recently stated in an interview with CNBC: "We need to focus on the persistence of inflation. If the February data does not show a significant retreat, the high interest rate policy may continue until mid-year" (CNBC, 2025). The market generally expects a rate cut of only 0.5% in 2025 (U.S. Bank, 2025), indicating that policy adjustments will be extremely cautious, and any rate cuts will depend on a comprehensive performance of inflation data and economic growth.

However, if the CPI is higher than expected (such as 3.0% or higher), it may postpone the interest rate cut plan, or even trigger a rise in hawkish views, considering maintaining or slightly adjusting high interest rates to control inflation. The CME FedWatch tool shows that the current market probability of an interest rate cut before June 2025 is only 30%, reflecting investors' lack of confidence in inflation falling. On the contrary, if the CPI is lower than 2.8%, it may open the door to an interest rate cut, stimulating further increases in the stock market and crypto market.

Encryption market: Fluctuation and risks coexist

The encryption market has been performing strongly recently, with the price of Bitcoin (BTC) breaking through $60,000 in early 2025. Analysts predict that it may rise to $75,000 to $170,000 in 2025 (Forbes, 2025; CoinPedia, 2025). This surge is attributed to increased institutional investment, the halving effect of Bitcoin, and optimistic market expectations for the Fed's interest rate cuts. However, the release of CPI data may be a key turning point.

The immediate response of the Bitcoin price to the CPI release reveals the close connection between inflation data and the crypto market.

These data indicate that if the February CPI is 2.9%, it may support the bullish trend of Bitcoin, with prices potentially testing the $70,000 mark. However, if the CPI exceeds 3.0%, it may reverse the upward trend, leading to short-term price declines, and even exacerbate market selling pressure, especially in a high inflation environment, investors may turn to safe-haven assets such as gold. CoinPedia analysts warn: "The crypto market is highly sensitive to inflation data, with a 0.1% deviation being able to trigger sharp fluctuations, investors need to manage risks effectively."

Economic and Market Outlook: Stable or Reversal?

The release of the CPI data in February 2025 is not only an indicator of inflation but also a watershed for the direction of the economy and financial markets. The current US economy is showing moderate growth, with the unemployment rate staying below 4% and consumer demand remaining strong. If the CPI is 2.9%, it may sustain this trend, supporting confidence in the stock market and the crypto market, while also providing the Federal Reserve with room to continue its wait-and-see approach. The S&P 500 index has recently surpassed 5,500 points (Yahoo Finance, 2025), indicating investors' optimistic outlook on the economic prospects.

However, if CPI is higher than expected (e.g. 3.0% or higher), it may trigger market adjustments. Inflation exceeding expectations will delay rate cut expectations, increase borrowing costs for businesses and consumers, thereby dragging down economic growth. The crypto market may be hit first, with the price of Bitcoin potentially retracing to below $50,000, triggering a more widespread sell-off. Historical data shows that when CPI peaked at 8.5% in 2022, the price of Bitcoin dropped from $69,000 to $16,000, highlighting the destructive power of high inflation on risk assets.

Conversely, if CPI falls below 2.8%, it may pave the way for a rate cut, stimulating the stock market and crypto market to further rise. The Fed may cut rates by 25 basis points in mid-2025, boosting investor confidence and driving Bitcoin to challenge the $80,000 mark. However, this optimistic scenario depends on the continued easing of energy prices and supply chain pressures, while current geopolitical risks (such as escalating Russia-Ukraine conflict) may disrupt this expectation.

One noteworthy detail is that small changes in CPI data (such as 0.1%) are enough to affect market sentiment. Exclusive analysis by Grok 3 points out that this phenomenon reflects the fragility of the current economic environment, with investors having highly divergent expectations regarding inflation and monetary policy. Global central banks such as the European Central Bank and the Bank of Japan have also indicated their focus on US CPI data recently, demonstrating their influence on the global economy.

Industry and expert opinions

Economists and industry leaders have different views on the impact of the February CPI data. Joe Brusuelas of FactSet believes, 'The 2.9% CPI indicates that inflation pressures have not dissipated, but are not out of control either. The Fed may continue to watch closely, while the crypto market will closely monitor whether the data supports the current uptrend.' Meanwhile, crypto analyst PlanB stated, 'If the CPI is lower than expected, Bitcoin may break through $70,000, but if it exceeds expectations, the market may face a correction period' (Twitter, 2025).

Federal Reserve officials like Lael Brainard emphasize: "We need to balance inflation and employment goals, and the February data will be an important reference, but decisions will not be based solely on a single indicator" (Federal Reserve, 2025). This view reflects the complexity of the Federal Reserve's search for balance between high inflation and economic growth.

Conclusion: The choice at a critical moment

The release of the February 2025 CPI data is not only an indicator of inflation but also a key moment to test the resilience of the Fed's policy, the encryption market, and the global economic outlook. Grok 3 predicts that the 2.9% CPI may maintain the current trend, supporting confidence in moderate growth and risk assets; however, if the data deviates from expectations, it may reverse the market direction, triggering adjustments or declines. Investors should closely monitor the immediate reaction after the data release, combine it with the Fed's subsequent statements and global economic dynamics, and formulate appropriate strategies.

Disclaimer: The above content does not constitute investment advice.

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