Bitcoin’s Potential Breakout Amid Cooling Inflation and Rate Cut Speculations

Fear grips crypto markets as sentiment plunges—Could Powell’s “digital gold” stance spark a turnaround?

• Cooling inflation fuels rate cut expectations, boosting Bitcoin’s potential for a breakout.

• Market uncertainty persists as the Fed remains cautious despite rising liquidity hopes.

The latest U.S. core Consumer Price Index (CPI) report delivered an unexpected surprise, with inflation cooling faster than anticipated.

U.S. CPI shock

Core CPI came in at 3.1%, slightly below the projected 3.2%, while headline inflation also saw a minor decline. As a result, market expectations for rate cuts have surged, with the probability of a May cut jumping to 31.4%, more than tripling from last month.

Similarly, forecasts for three rate cuts by year-end have spiked fivefold to 32.5%, while the likelihood of four cuts has surged from a mere 1% to 21%, signaling a rapid shift in investor sentiment.

Execs weigh in

Remarking on the same, Matt Mena, Crypto Research Strategist at 21Shares, said in an email sent to COINOTAG,

“With today’s data adding to the case for rate cuts and risk assets rallying in response, it’s possible that recession risks have already been fully priced in. Bitcoin has rebounded, retesting $85K, while index futures push higher. This dynamic suggests that any rate cuts materializing this year could unleash a flood of liquidity, propelling equities and crypto higher.”

Despite cooling inflation, Bitcoin’s price has struggled to maintain momentum, slipping from over $84,000 to around $83,000 as traders weighed the impact of President Trump’s trade policies and broader macroeconomic uncertainty. According to the latest data from CoinMarketCap, BTC was trading at $83,030.57, reflecting a modest 0.57% gain in the past 24 hours.

Seeing Bitcoin’s current market trend, Mena added,

“With inflation cooling and recession fears still looming but not worsening, Bitcoin could be on the verge of its next major breakout, pushing past the stubborn sub-$90K range. A decisive move beyond this level could see BTC testing $95K resistance before making a run toward the highly anticipated $100K mark, solidifying its place in six-digit territory.”

Powell’s stance

While the market seems to be optimistic about potential rate cuts, Federal Reserve officials, including Chairman Jerome Powell and Governor Christopher Waller, have reiterated their cautious stance on rate cuts, signaling no rush to ease policy.

This has sparked concern among analysts, who warn that delaying cuts could trigger a bear market. In fact, investor Anthony Pompliano even speculated on 10th March that President Trump might be deliberately pressuring financial markets to force the Fed into action.

He questioned,

“Is this a master plan or are we watching uncontrolled destruction?!”

Way ahead

Mena further highlighted that the Crypto Fear and Greed Index has plunged to levels not seen since the Terra Luna collapse, reflecting heightened market anxiety. However, shifting narratives suggest a potential turnaround.

With Jerome Powell recognizing Bitcoin as “digital gold,” analysts see this as a step toward broader acceptance. Additionally, expectations of interest rate cuts and monetary expansion could provide a much-needed boost to Bitcoin and the broader crypto market, setting the stage for a potential recovery.

Conclusion

In summary, as the Federal Reserve deliberates on interest rates amidst changing economic indicators, Bitcoin stands at a critical juncture. With possible easing on the horizon and acknowledgment from key figures like Powell, the stage may be set for a significant turnaround in the crypto market, offering investors new opportunities to capitalize on recovery trends.