American inflation and its threat to the crypto market: what Bitcoin investors need to know about the economic forecast

Economists Sound the Alarm: Inflation in the US Could Accelerate Above 4% in 2026, Contradicting Crypto Bulls’ Expectations of Federal Reserve Rate Cuts. According to a new analysis by Adam Poznen from the Peterson Institute and Peter Orsag from Lazard, several systemic factors could reverse the inflationary trend, complicating the path to further reductions in borrowing costs in the US.

Such a forecast undermines investors’ hopes in digital assets, who assumed that easing inflationary pressures would automatically lead to an expansion of the money supply and rising prices for risky assets. Bitcoin has already reacted to this uncertainty, dropping to $78,630 (a 4.92% decline in recent days).

Four Powerful Factors That Will Pressure US Price Levels

Poznen and Orsag’s research highlights four key drivers capable of outweighing the natural decline in inflation driven by productivity gains from artificial intelligence and stabilization of the housing sector.

First, American importers will pass rising costs from Trump’s protectionist tariffs onto end consumers. This process occurs with a time lag, but by mid-2026, the effect will fully manifest, adding approximately 50 basis points to the core consumer price index.

Second, planned deportations of migrants could trigger a labor shortage in dependent sectors, inevitably leading to wage increases and demand-driven inflation. The third factor relates to expanding government spending, which could push fiscal deficits above 7% of GDP. Finally, easing financial conditions combined with rising inflation expectations create fertile ground for accelerating price growth.

When Monetary Policy Relaxation May Become Impossible

The return of inflationary pressure in the US will significantly hinder the Fed’s work. If the central bank begins to impose restrictions when prices are rising faster than expected, it will disappoint those betting on aggressive rate cuts. Investment banks currently expect the Federal Reserve to cut rates by 50-75 basis points over the year, but crypto enthusiasts hoped for more substantial steps.

Cryptocurrency platform Bitunix analysts noted an important paradox: the real risk at this stage is not in rushing to loosen policy, but in excessive caution following a period of structural inflation decline. Such a mistake in the long term could lead to sharper and more destructive corrections later on.

Treasury Bonds Indicate That a Crisis Is Near

Markets have already begun to reevaluate their expectations. The yield on 10-year US Treasury bonds reached a five-month high of 4.31% this week, following the upward trend in global government bond rates, including Japanese bonds, which hit historic highs.

Rising Treasury yields typically lead to capital outflows from risky assets, including cryptocurrencies and stocks. For Bitcoin holders, this means investors are shifting to more conservative instruments in search of guaranteed returns, creating headwinds for the crypto market’s recovery.

Why This Matters for Bitcoin Investors Right Now

Digital asset bulls over the past year have bet that declining inflation in the US and subsequent easing of Fed monetary policy would create optimal conditions for uncorrelated asset growth. However, if Poznen and Orsag’s forecast proves correct, this narrative will be completely reversed.

The 2025 story with inflation at 2.7% (the lowest since 2020) may turn out to be a temporary truce rather than the start of a new deflationary era. Investors should prepare for the possibility that the Fed will avoid aggressive rate cuts throughout 2026, complicating the fundamental case for Bitcoin and other cryptocurrencies based on expectations of cheap money.