#CryptoCPIWatch **Inflation and Cryptocurrency Markets: Balance of Hopes and Risks in May 2025**

The expected slowdown in inflation in February (CPI down to 2.9% y/y) has maintained hopes for a softening of the Fed's policy; however, by May, the situation in the cryptocurrency markets shows a dynamic recovery. Bitcoin, despite its volatility, strengthened to **$104,358**, while Ethereum rose to **$2,638**, indicating a partial return of investor interest after the corrections at the beginning of the year.

**Key Pressure Factors:**

- **Trump's Tariffs** threaten to spiral inflation through rising import prices.

- **Stubborn Core Inflation** (3.2% y/y) limits the Fed's willingness to lower rates, supporting the strength of the dollar.

**Scenarios after CPI:**

- **Inflation below 2.9%** — acceleration of hype in the cryptocurrency markets, increased odds for a Fed rate cut starting Summer 2025.

- **Inflation above 3.0%** — risk of further capital outflows from risky assets.

*Current Context:*

Despite the fourth consecutive week of outflows from crypto funds (-$876 million), Bitcoin and Ethereum are demonstrating resilience, partially offsetting April's losses. This indicates that investors are beginning to reassess cryptocurrencies as a long-term hedge in conditions of uncertainty and volatility.