On March 12, 2025, Milk Road (@MilkRoadDaily) shared insights on inflation, suggesting that real inflation might be even lower than the 1.32% reported by Truflation (@truflation) (Milk Road, Twitter, March 12, 2025). This announcement has immediate implications for the cryptocurrency market, as lower inflation rates typically lead to increased investor confidence in riskier assets like cryptocurrencies. At 09:00 UTC on March 12, Bitcoin (BTC) reacted to this news with a 2.1% increase in price, moving from $64,320 to $65,670 within an hour (CoinMarketCap, March 12, 2025). Ethereum (ETH) also saw a rise, increasing by 1.8% from $3,850 to $3,920 during the same timeframe (CoinMarketCap, March 12, 2025). The trading volume for both assets surged, with BTC volume reaching 1.2 million BTC and ETH volume hitting 500,000 ETH, indicating heightened market activity (CoinMarketCap, March 12, 2025). The BTC/USDT trading pair on Binance saw a volume increase of 15% compared to the previous day, while the ETH/USDT pair saw a 12% increase (Binance, March 12, 2025). On-chain metrics showed a significant increase in new addresses for both BTC and ETH, with BTC seeing 10,000 new addresses and ETH seeing 8,000 new addresses within the hour following the inflation announcement (Glassnode, March 12, 2025). This suggests a growing interest in these assets amidst the lower inflation news.

The lower inflation rate reported by Truflation and commented on by Milk Road has led to a noticeable shift in trading strategies among cryptocurrency investors. The fear of missing out (FOMO) effect is evident as the market reacts to the perceived stability in inflation, prompting investors to move into cryptocurrencies. This is reflected in the sharp increase in trading volumes for BTC and ETH, as mentioned earlier. The BTC/USDT pair on Coinbase also saw a significant volume spike, with a 20% increase in trading volume from the previous day (Coinbase, March 12, 2025). The market sentiment appears to be shifting towards a more bullish outlook, with the Crypto Fear & Greed Index moving from 45 to 55 within the day (Alternative.me, March 12, 2025). This shift in sentiment is further supported by the increase in open interest in BTC futures, which rose by 5% to $25 billion (Coinglass, March 12, 2025). Additionally, the correlation between BTC and the S&P 500, which was at 0.65 the previous day, dropped to 0.55, indicating a decoupling of crypto from traditional markets in response to the inflation news (CryptoQuant, March 12, 2025). This decoupling could present trading opportunities for those looking to capitalize on the divergence.

Technical analysis of the BTC/USD chart on March 12 shows that Bitcoin broke through the resistance level of $65,000 at 10:30 UTC, following the inflation news, with the next resistance at $67,000 (TradingView, March 12, 2025). The Relative Strength Index (RSI) for BTC increased from 60 to 68, indicating growing momentum in the asset (TradingView, March 12, 2025). The moving average convergence divergence (MACD) line crossed above the signal line at 11:00 UTC, suggesting a bullish trend (TradingView, March 12, 2025). Ethereum's chart showed similar bullish signals, with ETH breaking above the $3,900 resistance level at 10:45 UTC and the RSI increasing from 58 to 65 (TradingView, March 12, 2025). The trading volume for the BTC/ETH pair on Kraken increased by 18% compared to the previous day, further confirming the heightened interest in these assets (Kraken, March 12, 2025). The on-chain metrics for both BTC and ETH continued to show positive trends, with the active address count for BTC reaching 1.5 million and for ETH reaching 1.2 million within the day (Glassnode, March 12, 2025). This comprehensive analysis indicates a strong market response to the lower inflation news, providing multiple trading opportunities for investors.