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Inflation figures crucial for cryptocurrency investors have been released, showing the lowest annual increase since February 2021. This indicates that the Federal Reserve (Fed) is nearing its target, suggesting readiness for expansionary steps to ease the cryptocurrency markets. What are the important details in the inflation report? What lies ahead for cryptocurrencies?
U.S. Inflation and Interest Rates
The markets expect two interest rate cuts this year, in September and October. As inflation declines, ongoing concerns despite tariff-related weaknesses compel caution from the Fed.
What does the inflation report detail? The housing index rose by 0.3% in April, representing nearly half of the overall increase. The energy index grew by 0.7%, with rises in the natural gas and electricity indices more than offsetting gasoline index declines. Meanwhile, the food index fell by 0.1%, with the at-home food index decreasing by 0.4%, while outside eating increased by 0.4%.
The change in April marks the smallest 12-month increase in the all-items index since February 2021. Excluding food and energy, the overall items index increased by 2.8% over the past 12 months.
The most significant percentage declines over the 12-month period were in energy and gasoline categories. The at-home food index rose 2.0% in the last year. Specifically, the index for meat, poultry, fish, and eggs increased by 7.0%, with the egg index up by 49.3%. The non-alcoholic beverages index rose 3.2%, and other at-home food categories increased by 0.7% in the same period.
Cryptocurrencies
If inflation had significantly preemptively triggered price increases due to tariff concerns, it would have been seen in April’s data. The lack of preemptive price loading from tariffs in the April figures is promising, especially since a 90-day tariff pause with China is occurring in May, June, and July, potentially avoiding new tariff-driven issues.
Meanwhile, Congress is intensely working on matters like tax exemptions to support cash abundance. The Fed is likely to take more easing steps while progressing toward its inflation goal, supporting cryptocurrencies.
Overall, the current situation suggests that with two or more interest rate cuts this year, cryptocurrencies could experience a favorable rise. Should trading volumes remain steady in May and June, and the sell-and-vacation sentiment not dominate, Bitcoin 
$105,589 could test new all-time high levels, and altcoins could surge to new peaks.
