Benjamin Cowen analyzes the latest inflation data and its impact on Bitcoin and financial markets. The Consumer Price Index (CPI) came in at 3.3%, higher than the expected 3.1%, continuing its upward trend since the Fed started cutting rates in September 2024. Investors now question whether the economy is heading for a soft landing or a hard landing.
1. Inflation Is Rising, But How Bad Is It?
Key Highlights:
- Inflation has increased every month since the Fed began cutting rates, moving from 2.4% to 3.3%.
- While housing and shelter costs are declining, categories like transportation and medical care are driving inflation higher.
- Some worry that inflation could spiral out of control, similar to the 1970s, but key differences exist, such as stable unemployment rates today.
2. Bitcoin and the 10-Year Yield
Key Highlights:
- The 10-year Treasury yield influences Bitcoin’s price action. In October 2023, when it topped at 5%, Bitcoin began its rally.
- If the 10-year yield rises again to test 5%, Bitcoin could face short-term pressure.
- If yields top out and decline, Bitcoin could resume its bullish trend, following past patterns.
3. Will the Fed Cut Rates Further?
Key Highlights:
- The market originally expected multiple rate cuts in 2025, but now those expectations are being delayed.
- If the Fed cuts too aggressively, inflation could surge, forcing higher rates later and hurting risk assets like crypto.
- If the Fed remains cautious, inflation might stabilize, allowing crypto and stocks to continue their uptrend.
4. What This Means for Crypto
Key Highlights:
- Rising inflation and higher yields could create short-term weakness for Bitcoin.
- If inflation levels off and the Fed resumes measured rate cuts, liquidity conditions could improve, benefiting crypto.
- If inflation keeps climbing, the Fed might be forced to pause or reverse rate cuts, increasing market volatility.
Final Take
Cowen believes the market is at a critical turning point. The 10-year yield is a key signal to watch. If it peaks, Bitcoin could rally. If inflation keeps climbing, expect more market turbulence.
🔍 Watch inflation and the 10-year yield closely. If they stabilize, Bitcoin could see relief. If not, expect more volatility.
