US Inflation Data Sparks Rally: Here’s Why Stocks and Crypto Are Soaring in 2025
Markets just got a sugar rush—and it’s all thanks to the Fed’s favorite economic indicator.
The Inflation Effect
Cooler-than-expected CPI numbers hit the wires this morning, and traders immediately dumped cash into risk assets. Bitcoin punched through resistance levels, while tech stocks rode the wave like it’s 2021 all over again. Turns out, Wall Street still bets on cheap money—even when it’s just implied.
Crypto’s Pavlovian Response
BTC and ETH led the charge, but altcoins stole the show with double-digit bounces. Meme coins? Naturally, they mooned hardest—because nothing says 'rational market' like dog-themed tokens outperforming the S&P 500.
The Fine Print
Don’t celebrate yet. This rally runs on hopium from a single data point—and we all remember how 'transitory' inflation worked out last time. (Spoiler: not great for your portfolio.)
What’s next for the crypto market?
The cryptocurrency market is likely to perform well in the long term, as analysts anticipate the Federal Reserve will begin cutting interest rates later this year.
Odds of a rate cut have jumped to 82% on Polymarket, while most users expect two cuts this year. Wall Street analysts from institutions like Goldman Sachs foresee three cuts this year, while Morgan Stanley expects seven cuts in 2026.
Cryptocurrencies and other risk assets tend to perform well when the Fed is easing policy, as seen during the COVID-19 pandemic and again in 2024. The Fed slashed rates to zero during the pandemic and implemented two cuts last year.
The rally is also driven by supply-demand dynamics. Bitcoin and Ethereum ETF inflows and corporate treasury demand have jumped, while token supply on exchanges continues to decline.
