The U.S. Consumer Price Index (CPI) data released today shows inflation cooling to 2.3% in April, slightly below expectations and marking the lowest annual inflation rate since early 2021. This softer inflation reading has had a noticeable impact on the cryptocurrency market. Bitcoin edged higher, surpassing $103,500, as investors grew more optimistic about the Federal Reserve potentially cutting interest rates later this year. The cooling inflation eases pressure on the Fed to maintain high rates, which is generally positive for risk assets like crypto. However, ongoing tariff-related price pressures still loom, creating some uncertainty.

Crypto markets were initially volatile ahead of the release, with Bitcoin dipping from a recent peak of $105K to around $103.4K before recovering. Altcoins largely remained subdued, though XRP bucked the trend with a 2-4% surge, showing resilience amid the mixed sentiment. The data suggests inflationary pressures are easing but core inflation remains steady at 2.8%, indicating underlying economic stability.

Overall, the CPI report has reignited hopes for a Fed rate cut, which could fuel a crypto rally, especially if inflation continues to cool. Yet, traders remain cautious given the tariff impacts and geopolitical factors influencing prices. This CPI reading will be pivotal for crypto investors watching for signals on monetary policy and market direction in the months ahead#CryptoCPIWatch