‘Cautious optimism’: Bitcoin, Ethereum shoot up following CPI release. How long will it last?

Bitcoin and Ethereum rose following the release of inflation data showing that prices had risen in the world’s largest economy in March — but not as much as expected.

The leading cryptocurrency hit $73,111 per coin, according to CoinGecko, after rising more than 2% over a 24-hour period. It has since dropped to $72,549 but is up nearly 9% over the past week.

Ethereum reached as high as $2,250 per coin. It has since settled at $2,226.

“Today’s print, read carefully, is more a reason for cautious optimism than alarm,” Thomas Perfumo, chief economist at crypto exchange Kraken, told DL News, adding that a “broader inflationary impulse is shrinking.”

The inflation release showed a war-fueled rise in energy costs, which was expected. Consumer prices jumped but core inflation — a measure that excludes volatile food and fuel prices — increased just 0.2% for the month, meaning that if inflation does cool this year, the Federal Reserve is more likely to cut interest rates.

Crypto markets this week also got a boost after US President Donald Trump announced a ceasefire with Iran.

Inflation and Iran

Bitcoin and Ethereum have typically performed well in a low-interest rate environment. But data from CME Group’s FedWatch tool shows that traders are, for the most part, largely betting the central bank will keep interest rates still.

But this could change, Perfumo noted.

“In the right scenario, inflation continues to decelerate in the second half of 2026,” he added.

“That would preserve policy optionality for central banks, which could be a tailwind for risk assets like Bitcoin.”

Angie Malltezi, chief operating officer  at Altius Labs, added that funding in perpetual interest was increasing, indicating that “bulls are still positioning for a breakout despite the macro pressure.”

Bitcoin and other assets have faced increased volatility since the US and Israel attacked Iran, with the leading cryptocurrency dropping hard on initial reports of war.

But peace talks are planned to go ahead this weekend, adding to increased optimism following Tuesday’s ceasefire.

Short squeeze?

The rise in crypto prices may have also been spurred by something else, according to one analyst: a short squeeze.

Short squeezes in crypto markets typically occur when rapid price increases force bearish traders to buy back assets, causing further surges.

James Butterfill, head of research at European asset manager CoinShares, told DL News that a short squeeze, combined with more buying from whales, led to the increase in Bitcoin and Ethereum prices.

Mathew Di Salvo is a news correspondent with DL News. Got a tip? Email at mdisalvo@dlnews.com.