Bitcoin Tops $84K as U.S. Inflation Slows, Strengthening Fed Rate Cut Prospects

February’s inflation data came in lower than expected, reinforcing hopes that the Federal Reserve may move forward with interest rate cuts in the coming months.

The Consumer Price Index (CPI) rose 0.2% in February, according to the latest Bureau of Labor Statistics report, falling below the 0.3% estimate and cooling from January’s 0.5% increase. On an annual basis, headline inflation stood at 2.8%, slightly lower than the 2.9% forecast and down from 3.0% in January.

Core CPI, which excludes food and energy, also showed signs of slowing. It increased 0.2% for the month, below the 0.3% expectation, and eased from January’s 0.4% rise. Year-over-year, core inflation measured 3.1%, below the anticipated 3.2% and declining from 3.3% the prior month.

Bitcoin and Stock Market Rally

Markets reacted swiftly to the cooling inflation data. Bitcoin (BTC) surged past $84,100, gaining over 1% in minutes, while Nasdaq 100 futures extended their rally to 1.5%. Meanwhile, gold, bonds, and the U.S. dollar remained largely unchanged.

The report comes after weeks of volatility in financial markets, with fears of a tariff-driven economic slowdown weighing on sentiment. Inflation’s persistence above the 2% target had raised doubts about the Fed’s ability to cut rates. The S&P 500 has lost 10% over the past month, while Bitcoin—after reaching a record high of $109,000 in January, just before President Trump’s inauguration—had fallen 30% from that peak earlier this week.

Eyes on the Fed and Upcoming Data

Before today’s CPI release, traders had priced in a 40% chance of a Fed rate cut in May and an 85% probability of at least one cut by June.

Investors are now watching Thursday’s Producer Price Index (PPI) report, which could either confirm or challenge the latest inflation trend, providing further signals on the Fed’s potential policy path.