Crypto Monthly - March 2025

U.S. Inflation Report Boosts Expectations for FED Rate Cuts

The latest U.S. inflation report shows that both the Consumer Price Index (CPI) and Core CPI came in lower than expected, increasing market expectations that the Federal Reserve (Fed) will cut interest rates this year. The market is currently pricing in a 31.4% chance of a rate cut in May, while expectations for three or four cuts in 2025 have surged significantly.

U.S. Inflation Cools, Strengthening Rate Cut Expectations

The February Consumer Price Index (CPI) fell to 2.8%, lower than the forecasted 2.9%. Meanwhile, Core CPI dropped to 3.1%, below expectations of 3.2%.

This marks the first time since July 2024 that both overall CPI and Core CPI have declined simultaneously, easing market concerns after months of inflation hovering around 3%.

According to Matt Mena, a crypto research strategist at 21Shares, cooling inflation raises the likelihood of Fed rate cuts, which would inject liquidity into the market and support risk assets like stocks and cryptocurrencies.

“Rate cut expectations have surged— the market now prices in a 31.4% chance of a rate cut in May, more than triple the probability from last month. Meanwhile, expectations for three rate cuts in 2025 have jumped fivefold to 32.5%, and expectations for **four cuts skyrocketed from 1% to 21%.”

Is Trump Intentionally Weakening the Market to Force FED Rate Cuts?

Fed Chairman Jerome Powell has repeatedly emphasized that the central bank is not in a hurry to cut interest rates, a stance echoed by Fed Governor Christopher Waller. Speaking at the University of New South Wales (Australia) on February 17, Waller stated that the Fed should maintain high interest rates until inflation reaches its target.

This has raised concerns among analysts that delaying rate cuts could push markets into a downturn.

On March 10, market analyst and investor Anthony Pompliano suggested that Donald Trump might be deliberately weakening financial markets to pressure the Fed into cutting interest rates.

According to The Kobeissi Letter, the U.S. government must refinance approximately $9.2 trillion in debt before it matures in 2025. If it cannot refinance at lower interest rates, the national debt—now exceeding $36 trillion—will continue to grow, leading to soaring interest payments.

For this reason, interest rate cuts have become a top priority for the Trump administration, even if it means short-term financial market turmoil.

🔥 The U.S. President Just Gave Advice to the FED

ETF Fund Flows – March 20, 2025

BTC Spot ETF

• BlackRock (IBIT): Buy $172.2M

• Fidelity (FBTC): Buy $9.2M

• Bitwise (BITB): Sell $17.4M

• Franklin (EZBC): Sell $7.3M

• VanEck (HODL): Buy $11.9M

• Grayscale (GBTC): Sell $8M

• Grayscale Mini (BTC): Buy $5.2M

• Other funds: 0

👉 Net Flow: +$165.8M

🔹 7th positive net inflow day of the month, with a total volume of $1.91B

ETH Spot ETF

• BlackRock (ETHA): Sell $9M

• Fidelity (FETH): Sell $3.5M

• Other funds: 0

👉 Net Flow: -$12.5M

🔹 9th negative net inflow day of the month, with a total volume of $200.6M

Update on March 21, 2025

• The FED maintains its plan for two rate cuts in 2025.

• The Federal Reserve keeps interest rates unchanged at 4.25% - 4.5%.

• The U.S. economic outlook indicates higher inflation and lower economic growth.

• Fed Chair Jerome Powell stated that "a significant portion" of the higher inflation expectations comes from tariffs. However, the impact of Trump's tariff policies is only temporary.

• Powell: "Although economists have generally raised their estimates of the likelihood of a recession, the chances of a severe recession remain low."

Is it time to buy?

Bitcoin, Ethereum and other altcoins are now consolidating in the support zone after a big drop since February. Let's take a look at the Total market cap chart

If that grey support zone can hold it, we might see a rally up in the coming months. Fundamentally, big money, funds and whales are still in the game, they are still buying. So we can still hope for another uptrend to come, from an optimistic perspective, otherwise, be prepared for the worst. Remember to be responsible for your own money, capital management and sustain in the long run is the key to survive in this game.