Why is the crypto market suddenly up? XRP up 5.4%, BTC up 3%

The crypto market recovered some of its losses Wednesday following a lower-than-expected US Consumer Price Index (CPI) report. Bitcoin surged above $84,000, while XRP crossed the $2.25 mark, gaining 6% in the last 24 hours. The global market capitalization also climbed to $2.76 trillion, a 2.6% increase from the previous day.

According to capital markets analysts, the Kobeissi Letter, the short-term market rally comes against the backdrop of inflation data that showed price increases are slowing down, with the CPI rising 2.8% in the 12 months through February.

BREAKING: Bitcoin surges above $84,000 as U.S. CPI inflation falls more than expected. pic.twitter.com/aRAvNQiQOu

— The Kobeissi Letter (@KobeissiLetter) March 12, 2025

The uptick is a slight decline from January’s 3% increase and fell below analysts’ expectations of 2.9%. On a monthly basis, inflation rose 0.2%, also lower than forecasts.

Inflation cools, crypto markets gain

The February CPI report is the first full inflation reading under President Donald Trump’s new administration, though it does not yet reflect the impact of recently imposed tariffs.

Bitcoin, the leading cryptocurrency by market cap, briefly touched $95,000 earlier in March after Trump’s administration announced plans to establish a strategic Bitcoin reserve. But the market soon corrected and sent BTC plunging below $77,000 on March 11, its lowest level since November 2024.

Still, in the last 24 hours, Bitcoin has rebounded to levels as high as $84,000 before settling around $83,300, according to CoinGecko data. Analysts suggest that if inflation concerns persist, the coin could fail to breach its immediate resistance at $90,000 and could dip back to the $80,000 range.

XRP’s price action today has also been mildly bullish, with the token breaking above the resistance level at $1.96, and is now trading 4% up from Tuesday’s close. Technical analysis points to resistance levels at $2.8, $3.5, and $5. 

If XRP maintains its momentum, a move toward the first target could represent a 161% upside. However, a failure to hold above $2 could trigger a correction, with potential retracements to $0.98 or even $0.73 in the event of a deeper pullback.

Speaking on CNBC’s “Closing Bell” on Tuesday, 3Fourteen Research co-founder Warren Pies said it does seem like a good time to take positions in the market now, but investors should wait for the White House or the Feds to say what’s next.

“We’re just waiting on some kind of policy response, either from the Fed or the administration, I think that’s going to be a little bit slow coming. And so I don’t think it’s time to buy the dip just yet.”

Stock markets show positives in Wednesday’s open sessions

The impact of the CPI report was also felt across traditional financial markets, as the Dow Jones Industrial Average rose 200 points, gaining 0.5%, while the S&P 500 climbed 1%. The Nasdaq Composite led the rally with a 1.8% increase.

The Dow and S&P 500 have both declined more than 3% this week, while the Nasdaq has dropped 4%. On Tuesday, the S&P 500 briefly entered correction territory, falling 10% from its February record high. Over the past month, the index has lost nearly 8%, with the Dow down 6.6% and the Nasdaq shedding 11.3%.

Markets had been unsettled after Trump initially moved to increase tariffs on Canadian aluminum and steel, only to later walk back the decision.

All three major US stock indexes fell on Tuesday but saw a partial recovery after the CPI release. Meanwhile, the Cboe Volatility Index (VIX), often referred to as Wall Street’s “fear gauge,” declined by 3% to 26.

In Europe, major stock indexes in France, Germany, and Italy gained over 1%, even as concerns over Trump’s tariff policies lingered. 

On Wednesday, the Trump administration’s 25% tariffs on all steel and aluminum imports came into play. Economists are worried the policy may cause stagflation, a scenario where inflation rises while stifling economic growth.

Inflationary pressures have made the Federal Reserve’s approach to cutting interest rates more cautious by the week. The central bank asserts that inflation levels above 2.5% could render monetary easing useless, even if rates are seemingly slowing down now.

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