Can the Fed Save Trump? March CPI Increases Rate Cut Expectations, Yet Bitcoin Still Declines!

TradingKey - The March CPI in the U.S. fell short of expectations, increasing hopes for a rate cut. But why is Bitcoin dropping instead of rising?

On Thursday evening, the U.S. Bureau of Labor Statistics released the March CPI data. It showed a year-over-year increase of 2.4%, below the market's 2.6% forecast. The core CPI rose 2.8%, also lower than the expected 3.0%.

After the CPI report, the market expected the Fed to keep rates steady in May. However, the likelihood of a 25 basis point cut in June rose from 49% to 61%. Despite this, Bitcoin (BTC)  was hit hard, dropping below $80,000. This morning, it fell as low as $78,000 but has since rebounded.

Bitcoin Price Trend Chart, Source: CoinMarketCap.

Recently, Trump has raised tariffs on China from 104% to 125%, and then to 145% last night. In retaliation, China increased tariffs on the U.S. from 34% to 84%, now reaching 125%.

The tariff war is escalating. Market panic is growing, and expectations for a rate cut's "benefits" are diminishing. However, Trump's tariffs are unlikely to last forever. They will eventually stop or lessen. This could coincide with the Fed's rate cuts, potentially calming market fears and reversing the trend.