CPI, or Consumer Price Index, is a key indicator for measuring the inflation level of a country's economy. It reflects the price changes of goods and services purchased by the average consumer, covering a wide range of areas from daily necessities to rent.

The rise and fall of the CPI directly affects the monetary policy decisions of the central bank. When the CPI continues to rise, the central bank may take measures to raise interest rates to curb inflation; conversely, if the CPI decreases, it may consider lowering interest rates to stimulate economic activity.

These monetary policy changes have a profound impact on financial markets. In terms of the stock market, low CPI and expectations of interest rate cuts usually bring positive effects, as lower corporate financing costs are beneficial for improving profitability. Conversely, high CPI and expectations of interest rate hikes often put pressure on the stock market, and the CPI data in March 2025 exceeding expectations led to a significant drop in US stocks.

The cryptocurrency market reacts more violently to CPI. In a low inflation environment, investors tend to favor high-risk assets, driving up the prices of cryptocurrencies like Bitcoin and Ethereum. However, under high inflation expectations, funds may shift towards traditional safe-haven assets, putting pressure on the cryptocurrency market. After the release of the CPI data in February 2025, Bitcoin experienced a short-term sharp decline.

Overall, the impact of CPI data on financial markets cannot be ignored. A low CPI often brings optimistic sentiment, while a high CPI may trigger market turbulence. It is worth noting that the volatility in the cryptocurrency market is usually greater than that of traditional stock markets, and investors need to closely monitor the monthly released CPI data to adjust their investment strategies in a timely manner.