The higher-than-expected US inflation report shocked financial markets today (Wednesday), causing a sharp decline in cryptocurrency and stocks as a whole. Bitcoin fell below $95,000 after the release of its Consumer Price Index (CPI) data in January.
The report has affected Bitcoin and most Altcoin prices, hoping for a cut in the Federal Reserve in 2025. Bitcoin fell 2% today (Wednesday) to trade as low as $94,000. Also, prices have fallen in the Altcoin space, with Ethereum and XRP down 6% and 4% respectively.
CPI rose 0.5% in January, accelerating from forecasts of 0.3% up from a 0.4% increase in December, according to Bloomberg data. Each year, inflation rose to 3.0%, above the forecasted 2.9%.
Bitcoin prices plummeted, Source: CoinMarketCap
Core CPI, which excludes food and energy prices, was also higher than expected, at 0.4% in the previous month and 3.3% in the previous year. Data show that inflationary pressures remain stubborn and the market hopes to challenge financial easing in the near future.
The latest CPI reading has reinforced concerns that the Federal Reserve could hold interest rates longer. Just a day before the report, Fed Chairman Jerome Powell reportedly repeated that the central bank was cautious about early cuts.
January data further strengthened the lawsuits that the Fed maintains a restrictive stance. Market expectations for interest rate cuts in 2025 have changed dramatically.
Bitcoin’s decline fell below $95,000, extending the price consolidation period that began after temporarily exceeding $100,000 in November. Since then, cryptocurrencies have been stuck in the $91,000 to $105,000 range, overwhelmed by macroeconomic uncertainty.
Bitcoin faces price integration, source: TradingView
Several factors have contributed to Bitcoin’s struggle to maintain momentum. Concerns over artificial intelligence-driven economic changes in China, the potential trade war, and the Fed’s cautious stance on interest rate reductions all play a role, Coindesk reported.
Shift from speculative assets
Long-distance interest rates typically reduce the appeal of speculative assets like Bitcoin as investors seek safer benefits from bonds and other bonds. In addition to market concerns, analysts warn that the latest inflation numbers still do not reflect the potential impact of newly announced US tariffs on Chinese imports.
Inflation stubbornly surpasses the Fed’s 2% target, so markets may need to adapt to long-term, restrictive monetary policy. This could put risk in pressure on assets, including Bitcoin, soon.
The higher-than-expected US inflation report shocked financial markets today (Wednesday), causing a sharp decline in cryptocurrency and stocks as a whole. Bitcoin fell below $95,000 after the release of its Consumer Price Index (CPI) data in January.
The report has affected Bitcoin and most Altcoin prices, hoping for a cut in the Federal Reserve in 2025. Bitcoin fell 2% today (Wednesday) to trade as low as $94,000. Also, prices have fallen in the Altcoin space, with Ethereum and XRP down 6% and 4% respectively.
CPI rose 0.5% in January, accelerating from forecasts of 0.3% up from a 0.4% increase in December, according to Bloomberg data. Each year, inflation rose to 3.0%, above the forecasted 2.9%.
Bitcoin prices plummeted, Source: CoinMarketCap
Core CPI, which excludes food and energy prices, was also higher than expected, at 0.4% in the previous month and 3.3% in the previous year. Data show that inflationary pressures remain stubborn and the market hopes to challenge financial easing in the near future.
The latest CPI reading has reinforced concerns that the Federal Reserve could hold interest rates longer. Just a day before the report, Fed Chairman Jerome Powell reportedly repeated that the central bank was cautious about early cuts.
January data further strengthened the lawsuits that the Fed maintains a restrictive stance. Market expectations for interest rate cuts in 2025 have changed dramatically.
Bitcoin’s decline fell below $95,000, extending the price consolidation period that began after temporarily exceeding $100,000 in November. Since then, cryptocurrencies have been stuck in the $91,000 to $105,000 range, overwhelmed by macroeconomic uncertainty.
Bitcoin faces price integration, source: TradingView
Several factors have contributed to Bitcoin’s struggle to maintain momentum. Concerns over artificial intelligence-driven economic changes in China, the potential for a trade war, and the Fed’s cautious stance on interest rate reductions have all played a role, Coindesk reported.
Shift from speculative assets
Long-distance interest rates typically reduce the appeal of speculative assets like Bitcoin as investors seek safer benefits from bonds and other bonds. In addition to market concerns, analysts warn that the latest inflation numbers still do not reflect the potential impact of newly announced US tariffs on Chinese imports.
Inflation stubbornly surpasses the Fed’s 2% target, so markets may need to adapt to long-term, restrictive monetary policy. This could put risk in pressure on assets, including Bitcoin, soon.