The rate of inflation in the U.S. is starting to moderate, which has boosted positive sentiment in the conventional financial markets. Unlike the equities markets, however, another sector is underperforming, and that is cryptocurrency.
Although the equities markets are rising on the back of positive inflation figures, Bitcoin and other key cryptocurrencies have remained stagnant or are even seeing a slight decline.
Cooling Inflation: The Numbers
| Indicator | March 2025 | February 2025 | Year-over-Year Change |
|---|---|---|---|
| CPI (All Items) | +3.2% | +3.5% | Down 0.3% |
| Core CPI (Excl. Food & Energy) | +3.8% | +4.0% | Down 0.2% |
| Energy Prices | -2.1% | -1.3% | Down 3.4% |
Inflation is clearly slowing, especially in energy and goods, which typically boost risk-on sentiment in markets. Stocks surged on the news — the S&P 500 gained 1.7%, while the Nasdaq climbed 2.3%.
Crypto Price Snapshot
| Asset | 24H Change | Current Price (Apr 19, 2025) |
|---|---|---|
| Bitcoin | -0.4% | $63,850 |
| Ethereum | +0.2% | $3,120 |
| Solana | -1.1% | $145.60 |
| XRP | -0.6% | $0.58 |
Rate Cuts Still Uncertain
The Federal Reserve’s policy remains cautious because it hasn’t signaled plans to cut rates despite inflation being down.
Traders expected up to two or three rate cuts in 2025, but skepticism is growing after officials adopted a wait and see mentality. This makes it difficult for crypto which performs best in low-rate environments.
Crypto’s Correlation With Tech Is Fading
For the past few years, the correlation between Bitcoin and tech stocks has been high, but that is changing.
This shift might be because of macro movement into traditional sectors, regulatory headwinds, or just the growing up of the cryptocurrency market. In any case, a dropping Nasdaq no longer guarantees dropping crypto, and vice versa.
Regulatory Pressures Persist
This remains an important blocker affecting the market. After the SEC’s offensive against crypto exchanges, DeFi protocols and altcoins, there is so much uncertainty that makes this an unfavorable environment.
Lack of a clear, comprehensive strategy is also a drag on markets since investors feel like they can’t deploy their funds.
This change might not happen and crypto will continue to struggle in responding to wide-ranging economic data unlike stocks are able to, where equities are far more responsive to the data.
Market Sentiment Is Cautious
Market sentiment continues to be mixed despite positive on-chain data. As per Alternative.me’s Crypto Fear & Greed Index, the market sits at 52/100 which indicates neutral territory. This suggests that investors are indifferent as they neither seem bullish nor fearful.
At the same time, there seems to be an increase in short positions on Bitcoin and Ethereum, meaning most traders are betting against any upsurge in the near-term.
Halving Hype Has Faded (For Now)
Bitcoin’s halving event recently took place last week as many tend to view it as a bullish event owing to a reduction in supply poise. But historical data tends to confirm that price surges occur months after the halving.
Technically and fundamentally, investors seem to be waiting for clearer signals before increasing their positions.
Geopolitical Risks
This is another global unknown factor. Eastern Europe and Middle Eastern tensions continue to affect investor sentiment and behavior.
In risk-off environments, decentralized assets like cryptocurrency are also not spared. Capital tends to shift from volatile markets into safer instruments like bonds, gold, or the U.S Dollar.
What Could Trigger a Rally: Looking Forward
At the moment, crypto may not be responding with great strength, but there are certain factors that could create momentum.
- A Fed rate cut timeline clarity. – Indications of a June or July rate cut would likely cause a crypto boost.
- Post-halving narratives. – After Bitcoin’s supply reduction, the expected price increase might occur in Q2 or Q3.
Positive developments concerning ETFs, stablecoin legislative frameworks, or exchange licenses will likely change market sentiment for the better.
- Better Market Sentiment. – An increase in investment from funds, banks, and public companies could indicate improved institutional confidence.
Final Thoughts
Crypto pairs need not align directly with inflation data, as evidenced by the recent CPI coolant. While it is a move in the right direction, for now it does not appear sufficient to initiate a major rally for digital assets.
A combination of on-chain activity alongside additional regulatory cuts will have investors action-ready. Adjusting crypto price forecasts is prudent in anticipation of the broader macroeconomic climate.
Crypto is highly unlikely to show promising fluctuations in time horizons, especially when the macro visuals are painted a touch brighter.