The Kobeissi Letter Reacts to Crypto Market Volatility as Producer Price Index Drops, Yet Bitcoin and Stocks Struggle to Gain!

Bitcoin’s price remains under pressure even as inflation data comes in softer than expected. The latest PPI and CPI reports indicate cooling inflation, but BTC dropped before slightly recovering. Experts from The Kobeissi Letter point out that such inflation data once triggered strong stock market rallies. This shift resulted from Trump’s change of policies and the influence of economic policies and geopolitical risks. Market participants are now focusing on key upcoming events, including consumer sentiment reports and the Federal Reserve’s upcoming interest rate decision.

Inflation Eases, But Bitcoin Slips – What’s Going On?

Despite the positive and lower-than-expected PPI and CPI inflation rate data, Bitcoin has fallen in price yet again. In reaction to the news, BTC dropped 2.3%, trading near $81,500. As of writing this, the coin has had a recovery, trading near $82,000 with a 1.25% 24-hour drop. The stock market also did not show a positive reaction to this news. This decline in risk assets is happening as the dollar index shows a rebound in Dollars strength.

Based on the data presented by the US Bureau of Labor Statistics, the Producer Price Index has also decreased. The PPI followed the pattern seen in the Consumer Price Index, in which the figures came in lower than anticipated. BLS also released a statement with the PPI statistics. Stating, “On an unadjusted basis, the index for final demand advanced 3.2 percent for the 12 months ended in February.”. It also added, “In February, a 0.3-percent increase in prices for final demand goods offset a 0.2-percent decline in the index for final demand services.”

The Kobeissi Letter Warns of More Volatility as Tensions Rise

As the markets remain unaffected or even decline even more despite a positive Producer Price Index analysts have shared their opinion. The Kobeissi Letter, a leading analyst media group, has commented on this abnormality. It stated, “As we have seen, the market has had a very MUTED reaction to inflation data that would’ve previously sent the S&P 500 SHARPLY higher”. Also adding, “Why is this the case? This data provides President Trump a reason to keep doing what he is currently doing.”. The Kobeissi Letter also provided further reasoning for Trump’s policies in the X post.

There has been a clear MAIN takeaway from Trump's first few weeks in office.

He is willing to see short-term pain for long-term gain.

The market is pricing-in both uncertainty and change, a lethal combination.

Follow us @KobeissiLetter for real time analysis as this develops. pic.twitter.com/GjMplmJq1g

— The Kobeissi Letter (@KobeissiLetter) March 13, 2025

Based on the Kobeissi Letter’s X post, Trump’s second term’s policies have the exact opposite effect of his first term. However, Kobeissi Letter believes the reasoning for this move is that Trump is choosing short-term pain for long-term gain. As such, based on this analysis, the trade war will not only stop, but it will possibly become worse. Consequently, the lack of positive movement from markets is attributed to this ongoing global development. With no end to this conflict in sight, Kobeissi Letter urges investors to ready themselves for more volatility.

Future Market Catalysts: Consumer Sentiment & Rate Cuts

Two other important economic events will also happen in the coming days. Consumer sentiment report, a preliminary analysis of the customer sentiment data, is to be released on March 14, 2025. Here, the analysts attempt to gauge investor confidence regarding the prevailing economic situation. High confidence spurs spending, driving growth and inflation. Conversely, low sentiment signals economic caution, curbing spending and affecting assets like cryptocurrencies. Additionally, we will have the Federal Reserve’s next interest rate decision one week from now. However, the projections for financial easing are low, with CME Group’s FedWatch giving a 1% chance for a cut.

Will Economic Uncertainty Keep Bitcoin Stagnant? 

The combination of economic uncertainty, trade policy concerns, and currency strength keeps risk assets like Bitcoin and equities under pressure.  With no immediate rate cuts expected, liquidity conditions could remain tight. This environment may restrain growth in risk assets. Investors will assess how these factors unfold and shape market dynamics. Global trade and monetary policy shifts could further influence Bitcoin’s movement in the coming months.

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