Bitcoin rally could resume as tariff fears ease and CPI cools, says analyst

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Bitcoins Inflation still exceeds the Fed’s 2% target, ticking up 0.1% on a monthly basis.

Bitcoin’s price reclaimed $110,000 on Wednesday morning, surging briefly after the US May inflation report came in below economists’ expectations, according to TradingView data.

At press time, the largest digital asset was trading around $110,300, marking a slight gain over the past 24 hours.

Nic Puckrin, crypto analyst, investor, and founder of The Coin Bureau, believes Bitcoin has further upside potential as inflation is milder than expected and market fears around Trump’s tariffs have subsided.

Trump announced today on Truth Social that the US had reached a new trade deal with China, pending final approval by both leaders. He added that the US would get 55% tariffs and China would get 10%.

“Despite all the doom and gloom predictions, we’re now nearly halfway through the year, and the inflation genie remains contained in its bottle. Today’s CPI report confirms it – inflation isn’t as bad as everyone had feared, and risk assets will love this confirmation,” said Puckrin in a Wednesday note.

The year-over-year inflation rate edged up to 2.4% in May from 2.3% in April, slightly under the 2.5% forecast, despite worries that tariffs could heighten inflation, according to the Labor Department’s consumer price index.

May was widely seen as the first checkpoint to assess whether Trump’s newly escalated tariffs would impact the CPI.

Most economists believed that the effects would begin appearing in consumer prices by now. However, the latest CPI data showed only mild inflation, suggesting that either the tariff effects have yet to materialize or were less impactful than expected.

“The tariffs that spooked the market so much earlier this year have been walked back and softened almost entirely. Once the US and China sign a deal – which they have already finalized – we’ll be essentially back to the status quo,” Puckrin stated.

The analyst noted that two deflationary factors, including excess retail inventory and declining housing prices, could drive an overall trend of lower inflation in the coming months, potentially encouraging the Fed to cut rates and sparking the next Bitcoin rally.

“Now, we have retailers stuck with all the excess inventory they bought in preparation, which they will have to offload over the next few months at lower prices,” Puckrin explained.

On housing costs, which account for about a third of the CPI index, the analyst suggested that Trump’s deportation policies will reduce housing demand. With fewer people needing homes, rents and home prices could fall, which would lower the overall inflation rate.

“Regardless of lingering consumer cautiousness, I expect to see inflation trending lower throughout the year, which would also give the Fed the confidence to finally cut rates again,” he noted. “And this is what will push Bitcoin into the final leg of its rally this cycle and, hopefully, finally bring retail investors back into the crypto market.”

The Fed will convene its upcoming central bank meeting next week to announce its decision regarding interest rates. Market participants largely anticipate that the Fed will maintain current rate levels through at least September, according to Reuters polls.

In response to Wednesday’s CPI report, President Trump described the figures as “great numbers” and renewed his call for the central bank to cut interest rates by a full percentage point.