Bitcoin BTC could soon hit record price highs, triggering accelerated gains in the wider altcoin market, as easing U.S.-China trade tensions may see markets react positively to a potential slowdown in the April CPI due this week.

The United States reached a trade agreement with China after two days of high-level negotiations in Geneva, U.S. Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer announced on Sunday.

Both the countries announced a temporary reduction in tariffs with U.S. cutting tariffs on Chinese goods from 145% to 30% for a 90-day period. In a reciprocal move, China will also lower tariffs on U.S. goods from 125% to 10% over the same duration. The surprise announcement triggered a surge in the bitcoin price, sending it past $105,000.

The trade deal comes after weeks of a tit-for-tat trade war that saw both countries raise import tariffs above 100%, threatening to inject inflation into the global economy. As such, the positive March U.S. consumer price inflation data released last month was largely dismissed by investors and analysts as a lagging metric that didn’t accurately reflect the escalating trade tensions.

The bears, however, cannot make that argument anymore, thanks to the trade deal.

So, a continued softening of CPI could raise Fed rate cut bets, providing a bullish catalyst for a BTC rally to record highs above $110,000. On the other hand, a hotter-than-expected CPI could be dismissed as backwards-looking, reflecting the April tariffs and not accounting for the de-escalation in trade tensions.

The CPI due Tuesday is expected to show the cost of living eased to 2.3% year-on-year in April from March’s 2.4%, according to RBC. The core CPI, which excludes food and energy, is expected to have stayed at 2.8% year-over-year in April, with continued moderation in rent inflation.

According to 10x Research, consensus is that the headline CPI likely held unchanged at 2.4% in April.

“If this expectation holds, the market may view the inflation report as positive. Barring any negative tariffs headline, this week’s week’s inflation data could provide a bullish catalyst,” Markus Thielen, founder of 10x Research, told CoinDesk.

“CPI could be bullish, and may bring new all-time highs,” Thielen added.

Bitcoin, the leading cryptocurrency by market value, changed hands at around $105,500, just 3.6% short of hitting new highs above $109,350, CoinDesk data show.

BTC has had a near V-shaped recovery from $75,000 since early April, with prices surging 10% last week due to continued inflows into the spot exchange-traded funds (ETFs).