There is some quite interesting news from leading economists regarding US inflation this year. Adam Posen from the Peterson Institute and Peter Orszag from Lazard recently released research projecting inflation could surpass 4% in 2026, which is very different from market expectations that are anticipating ongoing disinflation.

What’s interesting is that this directly contradicts the narrative held by Bitcoin bulls. They rely on a scenario of stable disinflation and the Fed aggressively cutting interest rates. But it seems those calculations need to be revised.

According to their analysis, several factors will push prices up faster than expected. Trump tariffs, a tighter labor market, potential deportations, large fiscal deficits, and looser financial conditions could all be more dominant than the positive effects of AI productivity and falling housing costs. They estimate that by mid-2026, the delayed effects of tariffs will add about 50 basis points to core inflation.

If this projection is correct, the Fed will be much more cautious about cutting interest rates. Meanwhile, the crypto market has been expecting a 50-75 basis point cut this year. This could pose a serious obstacle to the bullish momentum currently building.

Higher inflation means real interest rates stay high, making risky assets like crypto less attractive. That’s why the 10-year Treasury yield recently hit 4.31%, the highest in five months. This condition has already started to show in market actions, with BTC dropping nearly 4% last week and now trading around $72.76K.

So, the main point is that hopes for smooth disinflation and a friendly Fed are being tested. If Posen and Orszag are right, we might see higher volatility because market expectations will need to be adjusted. Many are still optimistic about crypto this year, but this scenario shows there are risks to watch out for. It’s important not to focus only on one narrative but also to consider macro factors that could change the game.