According to the May Consumer Price Index, which was released on June 11, 2025, inflation rates are up once again. The current inflation rate of 2.4% represents an increase of 0.1%, which is still much below the predicted 2.5%. The numbers still show the lowest yearly growth since February 2021, so the news was met as a positive inflation marker.
Trump’s tariffs
Trump’s tariffs were the main reason why it was predicted that the inflation rate would go up. They were first deployed and then frozen for 90 days, ultimately resulting in mild inflation rates.
As a reminder, inflation rates in the US spiked after the coronavirus pandemic, reaching record-breaking highs. The pre-pandemic inflation levels have long been lingering around 2% and under, but the post-pandemic effects and raised interest rates elevated the inflation levels to a whopping 7% in 2023. In April of 2025, the inflation was lowered to 2.3%, showing the country’s economy is close to getting back to its original state.
Donald Trump stands by his belief that now’s the right time to cut interest rates to stimulate the economy, since inflation is getting back to its normal levels. Consequently, the US dollar would be weakened, urging other countries to purchase US goods.
The Fed disagrees with this opinion. According to the agency, the inflation is still higher than they would like it to be, and Trump’s tariffs are putting the Fed on high alert. The agency believes they could ruin all the progress that’s been made recently, so cutting interest rates at this moment goes against everything the Fed stands for.
Considering that interest rate cuts at the moment when inflation is still up would be inconsistent with the agency’s past actions, it’s highly unlikely they would come to fruition soon. Plus, some experts believe that Trump’s tariffs would eventually result in another inflation spike, so the Fed will likely adopt the wait-and-see approach.
Effect on the crypto market
The connection between cryptocurrency and inflation might not be evident at first, but it’s clearly recognizable for those with some knowledge about the topic. Cryptocurrency, especially Bitcoin (BTC) and Ethereum (ETH), has recently been regarded as a perfect inflation hedge.
Cryptocurrency has been gaining rapid momentum in the United States of America during the last decade, which has affected its widespread adoption. Today, US residents can use BTC and ETH to pay for gift cards, purchase luxurious watches, and even indulge in some gambling fun at the best ETH casinos to play at, which offer faster withdrawals and increased privacy on personal information. That wasn’t the case just 10 years ago.
Even more people became familiar with the current crypto landscape after the current President Donald Trump included it in his campaign. Trump branded himself as the pro-crypto candidate, promising that the US would become the crypto capital of the world.
That being said, even though crypto is usually seen as an inflation hedge, the latest CPI report leaves things ambiguous. Both casual crypto investors and experts are divided, as some believe that the inflation rates will spike once the 90-day tariff war pause ends. Others are in favor of a completely opposing opinion; they believe that the current rates show there’s no inflation, as it’s still below the expected threshold.
The opposing opinions demonstrate there’s an overall uncertainty stemming from the latest CPI report. All odds point to the inflation rate having little to no effect on the crypto industry, unless the Fed decides to start printing money. If that happens, people are likely to resort to a solution in other assets, such as Bitcoin and gold.
As a reminder, Bitcoin is such an excellent inflation hedge since it only has a pre-determined number of coins in circulation. Its fixed supply creates a shortage mindset, urging people to buy this asset and strengthen its long-term appeal. Bitcoin also has little to no correlation with other assets, so a weakened US dollar shouldn’t affect its price.
Of course, cryptocurrency is not a safe haven, as it still comes with its fair share of shortcomings, such as extreme volatility. While you can look at crypto price predictions that were made based on past data, you can rely on them to a certain extent only. As a crypto investor, you should always be ready for the other shoe to drop, meaning you shouldn’t invest more than you are comfortable losing.
As for the present moment, there are no indications that the current inflation rates will affect the crypto market, but all of that could easily change based on Trump’s and the Fed’s next moves. The end of the 90-day tariff pause will give more information regarding inflation and interest rates, the state of which will determine the next steps for crypto investors.
