Bitcoin holds firm as US inflation cools and Trump touts China trade deal, Fed rate cut

U.S. consumer prices rose less than expected in May, with headline CPI increasing 2.4% year-over-year and Core CPI holding at 2.8%, according to Bureau of Labor Statistics data released Wednesday. While headline CPI posted its first uptick since January, the broader inflation trend continued to cool.Financial markets largely shrugged off the report. Bitcoin traded between $109,600 and $110,100, according to The Block's price page, while equities showed a modest rise amid slight volatility.Nansen Principal Research Analyst Aurelie Barthere noted that U.S.–China trade talks may now be the more significant macro driver.“The data is unlikely to trigger a significant reaction in markets,” Barthere told The Block. “In contrast, the U.S.–China trade talks may carry more weight for risk assets, including cryptocurrencies. Progress or setbacks in these discussions could influence broader market sentiment and play a key role in whether major resistance levels in crypto are finally breached.”China deal and Fed rate cutAhead of the CPI release, President Donald Trump said on Truth Social that a new U.S.–China tariff deal has been finalized, pending formalities. He also called on the Federal Reserve to cut funding rates by a full percentage point.Nic Puckrin, founder of Coin Bureau, said falling inflation and "overblown" tariff concerns could prompt Fed action.“I expect to see inflation trending lower throughout the year, which would also give the Fed the confidence to finally cut rates again,” Puckrin remarked in an email shared with The Block.“And this is what could push Bitcoin into the final leg of its rally for this cycle and, hopefully, finally bring retail investors back into the crypto market,” Puckrin added. “Despite all the doom and gloom predictions, we’re now nearly halfway through the year and the inflation genie remains contained in its bottle.”The Fed’s next meeting is scheduled for June 17–18, though CME FedWatch indicates no rate cut is expected this month.Bullish bitcoin pictureWhile short-term market reactions have been muted, the broader outlook remains bullish, according to 21Shares Crypto Research Strategist Matt Mena.“These developments are sparking new investor flows,” Mena said, citing catalysts such as over $5.7 billion spot BTC exchange-traded net inflows in May, advancing crypto regulations, and Trump’s Strategic Bitcoin Reserve plan.Mena said these developments could "supercharge" BTC's breakout of the $105,000–$110,000 range and hit 21Shares’s $138,500 year-end target as early as this summer.“Adding to the macro tailwinds, President Trump just finalized a new trade deal with China, following a similar agreement with Mexico earlier this week, and more trade deals are expected to be announced in the weeks ahead. This series of diplomatic wins is helping restore macro certainty, creating a more stable environment for risk assets to rally.”Disclaimer: The Block is an independent media outlet that delivers news, research, and data. As of November 2023, Foresight Ventures is a majority investor of The Block. Foresight Ventures invests in other companies in the crypto space. Crypto exchange Bitget is an anchor LP for Foresight Ventures. The Block continues to operate independently to deliver objective, impactful, and timely information about the crypto industry. Here are our current financial disclosures.© 2025 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.