1. U.S. February Inflation Data Situation

Wednesday's U.S. inflation data shows:

February CPI annual rate is 2.8%, lower than the expected value of 2.90% and lower than the previous value of 3.00%;

February core CPI annual rate is 3.1%, lower than the expected value of 3.20% and lower than the previous value of 3.30%;

February CPI month-on-month rate is 0.2%, lower than the expected value of 0.30% and lower than the previous value of 0.50%.

The U.S. February CPI inflation data is broadly below expectations, with the CPI annual rate at a new low since last November;

CPI inflation decline has brought some much-needed relief to U.S. stock indices and provided space for the Federal Reserve to lower interest rates. The Nasdaq index rose 1.2% intraday, and the S&P 500 index rose 0.6%.

2. Recent U.S. Policies and Industry Dynamics

Policy Bill: The U.S. House of Representatives passed 292 votes in favor and 132 votes against to repeal the IRS DeFi broker rule, exempting decentralized cryptocurrency exchanges (DeFi) from the obligation to report sales gains and trading dates.

The U.S. House of Representatives passed a funding bill with 217 votes in favor and 213 against to prevent a government shutdown this weekend. The bill will extend funding basically at existing levels until September 30. The bill has been submitted to the Senate for review. Current federal funding will expire on March 14 at 23:59.

Industry Insights and Dynamics Bitcoin Magazine CEO David Bailey stated that the implementation of the U.S. strategic BTC reserve executive order is much tighter than the market expected, with timelines measured in days and weeks rather than months or years, and managers are acting swiftly. U.S. Senator Cynthia Lummis believes that the BTC bill is a solution to the U.S. national debt problem and the future of American prosperity.

The Chicago Board Options Exchange (CBOE) submitted an application to allow Franklin ETH ETF to stake.

On March 12, the cryptocurrency fear and greed index was 34 (up from 24 the previous day), indicating a shift from extreme fear to fear.

Japanese listed company Metaplanet announced that it has increased its holdings by 162 BTC.

BTC whale addresses have accumulated over 65,000 BTC in the past 30 days.

MtGox sent $930 million worth of BTC to a new address on March 11, possibly signaling a resumption of compensation to creditors.

3. Market Analysis and Comparison

Analyst Marcel Pechman stated: The current price trend shows significant differences from the crash in November 2021, when BTC fell from $69,000 to $40,000 over 60 days. The current correction is more similar to the mid-term pullback from $71,940 to $49,220 on June 7, 2024, a decline of 31.5%.

At the beginning of the bear market at the end of 2021, the dollar index rose from 92.4 to 96.0. The dollar index was at 109.2 in early 2025 and has since fallen to 104. BTC has a negative correlation with the dollar index. Essentially, BTC's road back to $90,000 benefits from the weakening dollar, and historical data shows that a 30% price correction does not indicate a bear market. The BTC and its derivatives market still shows resilience.

4. Matrixport Insights and Subsequent Expectations

Matrixport stated: The market trend changed abruptly since Trump's election last November, and a better-than-expected U.S. employment report quickly shifted market focus. The more hawkish stance of the Federal Reserve increased downward pressure on risk assets. Current market hopes rely on liquidity recovery to drive BTC higher. Under the unchanged hawkish tone of the Federal Reserve, the next round of increases may still require more patience.

5. Supplementary Inflation Data and Market Reactions

Wednesday's data showed that the U.S. February CPI annual rate is 2.8%, lower than the expected value of 2.90% and lower than the previous value of 3.00%; the February core CPI annual rate is 3.1%, lower than the expected value of 3.20% and lower than the previous value of 3.30%; the February CPI month-on-month rate is 0.2%, lower than the expected value of 0.30% and lower than the previous value of 0.50%.

February CPI inflation data is broadly below expectations, with the CPI annual rate of 2.8% being the lowest since last November; the CPI month-on-month rate of 0.2% being the lowest since last October; the core CPI annual rate of 3.1% being the lowest since April 2021; and the core CPI month-on-month rate of 0.2% being the lowest since last December.

After the data release: Traders still expect the Federal Reserve to resume rate cuts in June, increasing bets on at least two rate cuts this year, with the dollar index briefly dropping over 30 points to 103.34. Analyst Chris Anstey stated: The U.S. February CPI data is weaker than expected, both on a core and overall basis, which is good news for the Federal Reserve.

6. Economic Recession Risks and Trump's Policy Impact

Recession risk: Wall Street investment bank JPMorgan raised the probability of a U.S. recession this year from 30% in early 2025 to 40%;

Goldman Sachs economists raised the 12-month recession probability from 15% to 20%;

Morgan Stanley lowered its U.S. economic growth forecast, predicting a GDP growth rate of only 1.5% in 2025 and dropping to 1.2% in 2026;

Former U.S. Treasury Secretary Summers stated: Due to a series of measures taken by Trump that are undermining confidence, the probability of the U.S. economy entering a recession this year is nearly 50%.

Trump's Policy Impact: On Monday morning, Trump threatened to double the tariffs on Canadian steel and aluminum to 50%, but later in the afternoon retracted the threat. This flip-flopping style puts pressure on the market.

Goldman Sachs CEO Solomon stated: Trump's 'roller coaster' style tariff threats have suppressed business activity and called for Trump to provide clear guidance.

7. Stock Market and BTC Market Predictions

Wednesday's U.S. CPI report brought some much-needed relief to the U.S. stock market and provided space for the Federal Reserve to lower interest rates. The Nasdaq index rose 1.2% intraday, and the S&P 500 index rose 0.6%. Morgan Stanley analysts expect the S&P 500 index to hit a low of around 5500 points in the first half of this year and rebound to 6500 points before the end of 2025 (the current S&P 500 index is 5600 points, with a historical high of 6147 points);

Goldman Sachs predicts the S&P 500 index target price at 6200 points by the end of 2025.

Citi: Core inflation is slowing, and tariffs will come into effect later this spring, which will make the Federal Reserve's rate cuts later this year less concerning.

BTC Market: Standard Chartered's head Geoff Kendrick stated: BTC's decline is driven by overall market sentiment, not issues with BTC itself, and still maintains a year-end target of $200,000 for BTC. The recovery depends on two catalysts: an overall rebound in risk assets or purchases of BTC by countries like the U.S., which would be a positive factor. Attention should be focused on the clarification of Trump's policies or a rapid pivot by the Federal Reserve to rate cuts. If the probability of a rate cut in May rises from the current 50% to 75%, it could trigger a rebound. The current noise may actually increase the probability of rate cuts, strengthening long-term confidence.

8. Wall Street Predictions and Summary

Wall Street's predictions for 2025 are similar to those for 2023 and 2024, where bearish views were taken for the earlier period and bullish views for the later period. They believe that economic risks in the U.S. will lead to increased probabilities of interest rate cuts by the Federal Reserve, thereby triggering a rise in risk assets. This scenario has been repeated every year in the short economic cycle (Standard Chartered also categorizes BTC here).

The Federal Reserve's expectations for rate cuts this year have risen from 0-2 times previously to currently 2-3 times (there was a brief rise to 6 times in 2023 and 2024). Under the influence of the mainline rate cuts, BTC has previously risen to $31,000, $74,000, and $109,000. The Federal Reserve's rate cut script is expected to continue until mid-2026, falling to a neutral rate between 2-3%. Those immersed in the market for a long time may have experienced if the historical cycles (BTC or the Federal Reserve or the U.S. economy) have some reference value, then we are currently at the bottom of a new phase, waiting for the expected recovery.