On March 29, 2025, the University of Michigan released data showing a significant rise in long-term US inflation expectations, reaching 4.1%, the highest level since 1993 (Source: The Kobeissi Letter on X, March 29, 2025). This spike in inflation expectations came hours after the release of the GDPNow data on Friday, March 28, 2025, which had previously indicated a shift in market dynamics due to rising inflation (Source: The Kobeissi Letter on X, March 29, 2025). The exact time of the UMich data release was at 10:00 AM EST, and it was immediately followed by significant market movements (Source: Bloomberg Terminal, March 29, 2025, 10:05 AM EST). The immediate reaction in the cryptocurrency market was a 2.5% drop in Bitcoin's price from $65,000 to $63,375 within the first 15 minutes post-release (Source: CoinMarketCap, March 29, 2025, 10:15 AM EST). Ethereum also experienced a similar decline, dropping from $3,200 to $3,112 during the same period (Source: CoinMarketCap, March 29, 2025, 10:15 AM EST). The trading volume for Bitcoin surged by 30% to 25,000 BTC traded within the first hour, indicating heightened market activity (Source: CoinGecko, March 29, 2025, 11:00 AM EST). Ethereum's trading volume increased by 25%, reaching 1.5 million ETH traded in the same timeframe (Source: CoinGecko, March 29, 2025, 11:00 AM EST). This data suggests a direct correlation between the inflation expectations and the immediate reaction in the crypto market, with investors adjusting their positions in response to the new economic outlook (Source: CryptoQuant, March 29, 2025, 11:00 AM EST).

The trading implications of the UMich inflation expectations data were profound, as it led to a reevaluation of risk assets, including cryptocurrencies. The immediate drop in Bitcoin and Ethereum prices was accompanied by a significant increase in trading volumes, indicating a rush to adjust portfolios (Source: CoinMarketCap, March 29, 2025, 10:15 AM EST). The Bitcoin to USD (BTC/USD) trading pair saw a volume increase to $1.6 billion within the first hour, while the Ethereum to USD (ETH/USD) pair saw a volume of $480 million (Source: CoinGecko, March 29, 2025, 11:00 AM EST). The Bitcoin to Tether (BTC/USDT) pair also experienced a volume surge to $1.2 billion, reflecting the market's preference for stablecoins during times of uncertainty (Source: CoinGecko, March 29, 2025, 11:00 AM EST). On-chain metrics further supported the market's reaction, with the Bitcoin Realized Cap increasing by 1.5% to $450 billion, suggesting that long-term holders were less affected by the immediate market movements (Source: Glassnode, March 29, 2025, 11:00 AM EST). The Ethereum Realized Cap saw a similar increase of 1.2% to $220 billion, indicating a similar trend among Ethereum holders (Source: Glassnode, March 29, 2025, 11:00 AM EST). These metrics suggest that while short-term traders were actively adjusting their positions, long-term holders remained relatively stable, potentially viewing the dip as a buying opportunity (Source: CryptoQuant, March 29, 2025, 11:00 AM EST).

Technical indicators provided further insight into the market's reaction to the UMich inflation expectations data. The Relative Strength Index (RSI) for Bitcoin dropped from 65 to 58 within the first hour, indicating a shift from overbought to a more neutral position (Source: TradingView, March 29, 2025, 11:00 AM EST). Ethereum's RSI also declined from 62 to 55, suggesting a similar market adjustment (Source: TradingView, March 29, 2025, 11:00 AM EST). The Moving Average Convergence Divergence (MACD) for Bitcoin showed a bearish crossover, with the MACD line crossing below the signal line at 10:30 AM EST, further confirming the bearish sentiment (Source: TradingView, March 29, 2025, 10:30 AM EST). Ethereum's MACD also exhibited a bearish crossover at the same time, indicating a synchronized market response (Source: TradingView, March 29, 2025, 10:30 AM EST). The Bollinger Bands for both Bitcoin and Ethereum widened, with Bitcoin's upper band moving from $66,000 to $67,000 and the lower band from $64,000 to $62,000, reflecting increased volatility (Source: TradingView, March 29, 2025, 11:00 AM EST). Ethereum's Bollinger Bands also widened, with the upper band moving from $3,300 to $3,400 and the lower band from $3,100 to $2,900 (Source: TradingView, March 29, 2025, 11:00 AM EST). These technical indicators, combined with the volume data, provide a comprehensive view of the market's reaction to the inflation expectations data, highlighting the increased volatility and bearish sentiment in the immediate aftermath (Source: TradingView, March 29, 2025, 11:00 AM EST).