America's inflation news throws the crypto market out of balance - why Bitcoin investors need to be alert

The cryptocurrency market feels the shockwaves of new inflation news from America. This week, Bitcoin reaches a deep dip, with the price falling back to $78,75K (-4.85% in 24 hours), just as economic experts warn of a return of higher inflation in the United States. This runs counter to the hopes of crypto investors who were counting on lower interest rates and faster price declines.

What do American economists say about upcoming inflation?

The Peterson Institute and Lazard have published an alarming report: American inflation could rise above 4% this year. Adam Posen and Peter Orszag, two leading economists, indicate that multiple factors could work together to push inflation upward. This news acts as a cold shower for the market.

The experts explain that the American inflation news is fueled by several causes simultaneously. Trump-era trade tariffs could increase import costs. A tightening labor market could create wage pressure. Possible migrant deportations could cause labor shortages in sectors reliant on migrants. Additionally, they point to large budget deficits exceeding 7% of GDP and looser money market conditions.

All these factors threaten to have a greater impact than the deflationary forces currently expected by markets—namely, a continued decline in housing prices and productivity gains through artificial intelligence.

How does this inflation transmission work in practice?

According to Orszag and Posen, the transmission of trade tariffs will proceed slowly. Importers will not immediately pass on the increased costs to consumers but will do so gradually. This delay provides short-term price stabilization but will lead to structural price increases by mid-2026.

The researchers estimate that this delayed pass-through will largely be completed by mid-2026 and could add about 50 basis points to core inflation. At the same time, labor market tensions caused by deportation measures could boost wage growth and strengthen demand-driven inflation.

This multi-factor American inflation situation puts the Federal Reserve in a difficult position. Rapid interest rate cuts become less likely if inflation truly exceeds 4%. This is the worst-case scenario for Bitcoin bulls, who were betting on rate cuts.

How does the market react to this news?

The effects are already visible. The 10-year Treasury yield climbed to 4.31% this week—its highest point in five months. This fits a larger pattern: global bond yields are rising, including Japanese government bonds reaching record levels.

In this context, cryptocurrencies are losing appeal. Bitcoin dropped this week from around $90,000 to current levels around $78,750. Risky investments like stocks and digital assets become less attractive when bond yields become more appealing.

Analysts from cryptocurrency platforms suggest that the actual policy risks are now different than expected. Instead of early easing, there is now more concern about policymakers’ caution, which could ultimately make an abrupt adjustment process unavoidable. Markets seem to already be pricing in this scenario.

The ongoing uncertainty

It comes down to this: American inflation news proves that crypto’s heavy dependence on monetary policy is a double-edged sword. The expectation of rate cuts pushed Bitcoin up. The warning of returning inflation is now pushing it down.

For cryptocurrency investors, it is essential to understand that this macroeconomic dynamic—forecasts of American inflation, Fed policy, Treasury yields—directly impacts their portfolio. The comments from Posen and Orszag could prove crucial in the months ahead.