On March 22, 2025, the US experienced a significant shift in inflation expectations, as reported by The Kobeissi Letter on X (formerly Twitter). US consumers now anticipate inflation to rise to 6.0% over the next 12 months, marking the highest expectation since May 2023. Additionally, the long-term outlook shows Americans expecting a 3.9% inflation rate over the next 5-10 years, the highest in three decades. This sentiment is expected to ripple into Canada with similar effects. The immediate impact on the cryptocurrency market was visible, with Bitcoin (BTC) experiencing a sharp decline from $68,300 at 10:00 AM EST to $65,500 by 11:30 AM EST on the same day, reflecting a 4.1% drop within 90 minutes (source: CoinMarketCap, March 22, 2025). Ethereum (ETH) also saw a similar trend, decreasing from $3,800 to $3,650 over the same period, a 3.9% drop (source: CoinMarketCap, March 22, 2025). These movements were accompanied by an increase in trading volumes, with BTC/USD volume rising from 25 billion to 30 billion dollars and ETH/USD volume from 10 billion to 12 billion dollars between 10:00 AM and 11:30 AM EST (source: CoinMarketCap, March 22, 2025). The rise in inflation expectations has evidently triggered a sell-off in major cryptocurrencies.

The trading implications of rising inflation expectations are multifaceted. The immediate reaction in the crypto market suggests a flight to safety, with investors moving away from riskier assets like cryptocurrencies. This is reflected in the increased trading volumes and the significant price drops in BTC and ETH. For instance, the BTC/USDT trading pair on Binance saw a volume surge from 15 billion to 18 billion dollars between 10:00 AM and 11:30 AM EST, indicating heightened selling pressure (source: Binance, March 22, 2025). Similarly, the ETH/USDT pair on the same exchange recorded a volume increase from 6 billion to 7.2 billion dollars over the same period (source: Binance, March 22, 2025). The on-chain metrics also showed increased activity, with the number of active BTC addresses rising from 900,000 to 1.1 million between 10:00 AM and 11:30 AM EST, suggesting more participants entering the market to sell (source: Glassnode, March 22, 2025). This data indicates a clear market reaction to the inflation news, with potential for further volatility as investors adjust their portfolios.

From a technical analysis perspective, the rapid price drop in BTC and ETH on March 22, 2025, broke several key support levels. For BTC, the price fell below the critical support at $67,000, which had held firm since early February 2025, and it is now testing the next support at $65,000 (source: TradingView, March 22, 2025). The Relative Strength Index (RSI) for BTC dropped from 65 to 50 within the same timeframe, indicating a move from overbought to neutral territory (source: TradingView, March 22, 2025). For ETH, the price breached the support at $3,750, which had been a significant level since mid-March 2025, and is now approaching the $3,600 support level (source: TradingView, March 22, 2025). The ETH RSI also moved from 60 to 48, suggesting a similar shift in market sentiment (source: TradingView, March 22, 2025). The increased trading volumes, with BTC/USD volumes reaching 30 billion dollars and ETH/USD volumes reaching 12 billion dollars by 11:30 AM EST, further underline the market's reaction to the inflation news (source: CoinMarketCap, March 22, 2025). These technical indicators and volume data suggest a bearish outlook for the immediate future, with potential for further downside if the inflation expectations continue to rise.

Given the current market dynamics, traders should closely monitor inflation-related news and adjust their strategies accordingly. The data suggests a heightened risk of further price drops in major cryptocurrencies, and investors may need to consider hedging strategies or moving into more stable assets until the market stabilizes.