- Bitget Chief Analyst Ryan Lee said the market, including Bitcoin and Ethereum, has mostly priced in the recent US CPI report.
- However, renewed escalation in the US-Iran war could trigger another wild market swing, including in crypto prices.
The recent US Consumer Price Index (CPI) readings came in hot. Headline inflation surged to its highest in the past three years.
Headline CPI hit 4.2% year-over-year (YoY). It shows a significant gap with core inflation (excluding volatile food and energy prices) at 2.9%.
The considerable difference was primarily driven by a 23.5% jump in energy prices, triggered by a 40.6% climb in energy commodities, a 40.5% gain in gasoline prices, and a 40.5% rise in fuel oil costs.
Ryan Lee, Chief Analyst at Bitget Research, stated that consensus forecasts have already anticipated the latest CPI data. Market observers believe the market has already priced in the numbers; hence, investors have come to terms with the fact that a near-term Federal Reserve easing is unlikely. On the other hand, they are increasingly pricing a prolonged period of restrictive monetary policy.
The Latest CPI Report’s Effects on Bitcoin and Ethereum
The Bitget official highlighted that a higher-than-expected inflation reading would have reinforced current market positioning. It would support yields and the dollar while weighing on liquidity-sensitive assets such as Bitcoin, Ethereum, and growth equities.
Meanwhile, a softer reading would challenge recent repricing in rate markets. It would improve expectations for policy easing and supporting broader risk sentiment.
Lee emphasized that the most important signal following the release may come from the bond market. Treasury yields have led the recent repricing across asset classes, and their direction after the CPI report provides a clearer indication of whether investors expect inflation pressures to persist or begin to moderate.
For Bitcoin and Ethereum, the outcome remains closely linked to liquidity expectations. It makes inflation data one of the key drivers of short-term market sentiment.
Along the way, Bitcoin and Ethereum have mostly traded sideways in the days leading up to the CPI report. BTC merely resumed its trajectory between just above $60K and nearly $63K on Wednesday, while ETH held around $1.6K over the same period.
Their patterns only proved that the market has largely priced the event as the conflict between the US and Iran drags on.
US Issues Another Ultimatum to Iran
The renewed escalation in the war between the US and Iran continues to hamper any meaningful gains in BTC and ETH. US President Donald Trump has issued another ultimatum to Tehran following frustrations over the slow progress in the negotiations.
Trump said the US will resume its attack on Iran, as the Islamic Revolutionary Guard Corps (IRGC) recently downed a US Apache helicopter. This time, the president is no longer ruling out strikes on Tehran’s vital civilian infrastructures, including water reservoirs, plants, and bridges.
Bitcoin, Ethereum, and other altcoins highly correlated with high-risk tech stocks will likely feel the squeeze of this dual macro-geopolitical shock.
Historically, when geopolitical tensions boil over, hard assets with limited supply (traditionally gold) see a rush of safe-haven capital. However, the modern crypto market is caught in a tug-of-war between two opposing forces.
