Bitcoin Price Surges as U.S. Inflation Falls to 2.8% in February, Boosting Market Optimism

Bitcoin surged past $84,000 on Wednesday after new inflation data showed consumer prices rose less than expected in February, easing fears of aggressive Federal Reserve rate hikes. The Consumer Price Index (CPI) increased

by 2.8% over the past year, below the 2.9% economists had projected. Core CPI, which excludes volatile food and energy prices, rose 3.1%, down from January’s 3.3%. The data boosted investor confidence, driving up both crypto and stock markets. Ethereum reached $1,938, Solana hit $127, and the Dow Jones Industrial Average futures rose 223 points. The S&P 500 and Nasdaq 100 also gained 0.8% and 0.9%, respectively.

Shelter costs, which account for a significant portion of the CPI, increased by 0.3% in February. The Bureau of Labor Statistics noted that this was partially offset by falling gasoline and airline ticket prices. President Donald Trump reacted to the data on Truth Social, saying, “It’s all coming down!” His administration’s recent 25% tariffs on steel and aluminum imports have raised concerns about potential inflationary effects, adding uncertainty to the economic outlook.

The minutes from the Fed’s December meeting suggested these policies could keep inflation above the 2% target. Traders have now priced in three interest rate cuts by the end of the year, up from just one a month ago, according to the CME FedWatch Tool. The Federal Open Market Committee (FOMC) is set to meet next week to release updated projections for economic growth and interest rates.

The Producer Price Index (PPI) report, set for release on Thursday, is expected to provide further insight into inflation trends. If wholesale prices also come in lower than expected, markets may rally further on hopes of rate cuts.

While inflation has cooled, it remains above the Fed’s 2% target, meaning policymakers may proceed cautiously. Powell recently stated that the central bank would take a measured approach to monetary easing, noting that the economy remains “in a good place.” Investors are now watching closely to see whether the Fed will confirm a shift toward rate cuts in the coming months.