The Discrepancy Between Conceptual Expectations and Reality: The Impact of Reemerging Inflation on Cryptocurrency Bullish Theories

Recent analyses released by Adam Posen, Director of the Peterson Institute for International Economics, and Peter R. Orszag, Chairman of Lazard, are causing ripples in the market. The new economic report warns that, contrary to the conceptual expectations that the US inflation rate could exceed 4% this year, a sharper inflationary acceleration may be unavoidable. This scenario directly challenges the optimistic narratives held by BitcoinBTC $88,370 investors and cryptocurrency bulls.

Trump Tariffs and Labor Market Tightening Break the Conceptual Optimism

According to Posen and Orszag’s analysis, several macroeconomic variables could disrupt market expectations. In particular, the tariffs policy of the Trump administration is identified as a key factor. It takes considerable time for importers to pass on tariff-related costs to consumers, and the researchers state, “Delayed transmission effects are expected to be largely completed by mid-2026, which could add 50 basis points to headline inflation through mid-year.”

An even more concerning aspect is the tightening of the labor market. Potential deportation policies targeting immigrants could lead to labor shortages in certain industries, increasing wage pressures. This is a classic demand-driven inflation scenario in traditional economics. Additionally, the projection that the US fiscal deficit could expand to over 7% of GDP also acts as a factor fueling inflation.

The Risks of Disinflation Bets: Limits of AI and Housing Price Declines

The market’s conceptual consensus has been that productivity gains from artificial intelligence (AI) and persistent declines in housing inflation will suppress prices. However, the researchers point out that these downward pressures may not fully offset the upward pressures from tariffs, immigration policies, and fiscal spending. Recent earnings reports from Microsoft and Meta, which show no slowdown in AI-related expenditures and the announcement of large-scale capital spending plans for 2026, raise questions about the inflation-controlling effects of AI investments being more limited than expected.

Analysts at cryptocurrency exchange Biternix evaluate the current policy risk as follows: “The real policy risk is not easing too early, but acting too cautiously even after structural disinflation has taken hold. This will ultimately force more abrupt and chaotic adjustments.”

Federal Reserve Rate Cuts May Fall Short of Expectations

The outlook for renewed inflation directly influences the Federal Reserve’s policy decisions. Currently, several investment banks expect the Fed to cut the benchmark interest rate by 50–75 basis points this year. However, if high inflation persists, the Fed may be unable to implement the aggressive rate cuts that market participants conceptually expect. This would directly impact risk asset investors who have bet on low interest rates.

For reference, the Consumer Price Index (CPI) in 2025 is projected to fall to 2.7%, the lowest since 2020, but the possibility of exceeding 4% again this year remains a serious variable.

The Impact of Rising Treasury Yields on Cryptocurrency and Stocks

The market has already begun to reflect this shift in conceptual expectations. As global government bond yields rise, the US 10-year Treasury yield has surged to 4.31%, reaching a five-month high. This is also linked to the sharp increase in Japanese government bond yields, which hit record highs.

Higher bond yields reduce the relative attractiveness of risk assets such as stocks and cryptocurrencies. Bitcoin, in this environment, exhibits volatility, with spot prices fluctuating around $88,370. These price adjustments reflect changing inflation outlooks and weakened expectations for rate cuts.

Reassessing the 2026 Inflation Scenario and Investors’ Conceptual Biases

The key takeaway from Posen and Orszag’s analysis is the vulnerability of scenarios shaped by investors’ conceptual consensus. The expectations of disinflation and rapid rate cuts need significant revision due to various macroeconomic variables.

Crypto market participants now need to incorporate not only simple monetary easing scenarios but also risks of stagflation and policy uncertainty into their portfolios. The inflation trend in 2026 is expected to become a central factor in future asset allocation strategies.