A new academic study raises questions about the prevalent “permanent disinflation” expectation in the cryptocurrency market by suggesting that U.S. inflation could accelerate once more. The research indicates that consumer prices might exceed 4% by mid-2026, painting a risky picture for Bitcoin investors who are relying on interest rate cuts. This warning comes at a time when global bond yields are on the rise, increasing uncertainty regarding the short-term direction of risky assets. Analysts highlight that if the anticipated easing in monetary policy is delayed, the volatility in the cryptocurrency market could intensify.
Inflation Expectations Resurge
Peterson Institute for International Economics President Adam Posen and Lazard CEO Peter R. Orszag argue in their latest research note that the cost of living in the U.S. could rise faster than expected. According to the study, import tariffs, a tightening labor market, and high public spending might offset the downward pressure created by productivity gains from artificial intelligence.
The researchers point out the delayed impact of tariffs introduced during the Trump administration on consumer prices. Importers spread the cost increases over time, with the process expected to add approximately 50 basis points to headline inflation by mid-2026. Potential deportations in sectors dependent on immigrant labor could also trigger wage hikes, creating demand-driven price pressures.
Additionally, there is a projection that fiscal discipline relaxation could result in the budget deficit exceeding 7% of GDP. Looser financial conditions and unanchored inflation expectations are listed as other factors that could drive consumer prices higher. The researchers argue that the market consensus focusing on declining housing inflation and productivity gains falls short.
Implications for Bitcoin and Markets
In 2025, the official inflation indicator in the U.S., the consumer price index, had fallen to as low as 2.7%, strengthening expectations of aggressive interest rate cuts by the Federal Reserve (Fed). Some investment banks predicted a 50–75 basis points easing in 2026, while the cryptocurrency market was pricing in more rapid measures.
Cryptocurrency exchange Bitunix analysts highlight that policy risk may not stem from early easing but from remaining excessively cautious. They suggest that ignoring structural disinflation could necessitate a more drastic and disruptive policy adjustment in the future. Markets are already starting to price in a “delayed compensation” scenario.
Meanwhile, movements in the bond market are limiting risk appetite. The 10-year U.S. Treasury bond yield rose to a five-month high of 4.31%, while sharp selling in Japanese government bonds pushed global yields higher. The largest cryptocurrency, Bitcoin, saw a decline of approximately 4% during the week, dropping to around $90,000. The increase in yields has raised the alternative cost for stocks and cryptocurrencies.
