- January’s CPI rose 0.5%, exceeding market expectations of 0.3% and indicating persistent inflation pressures.
- Core CPI, excluding food and energy, increased by 0.4% month-over-month, surpassing the forecasted 0.3%.
- Bitcoin fell below $95,000 following the inflation report, while the CoinDesk 20 Index dropped 2.9%.
- Traditional markets reacted negatively, with stock futures falling 1% and Treasury yields climbing 10 basis points.
- Federal Reserve’s stance on maintaining higher rates longer appears validated by the inflation data.
Higher-than-expected inflation data in January sent cryptocurrency and traditional markets tumbling, challenging the narrative of imminent interest rate cuts. Bitcoin’s price retreated below the $95,000 mark as investors reassessed their positions amid growing economic concerns.
The January Consumer Price Index revealed a 0.5% monthly increase, significantly above the anticipated 0.3% rise. Year-over-year inflation reached 3.0%, exceeding both market expectations of 2.9% and December’s rate. Core inflation, which excludes volatile food and energy prices, climbed 0.4% monthly and 3.3% annually, surpassing forecasts and suggesting persistent underlying price pressures.
Federal Reserve Chairman Jay Powell’s recent congressional testimony gains additional weight following these numbers. His cautious stance on rate cuts aligns with the latest data, suggesting monetary policy might remain restrictive longer than markets had hoped.
The crypto market’s reaction was swift and decisive. Bitcoin, which had recently celebrated crossing the $100,000 milestone after Donald Trump‘s election victory, now faces technical pressure. The flagship cryptocurrency has maintained a trading range between $90,000 and $109,000 for over two months, with multiple factors including AI-related developments, China concerns, and trade war threats contributing to price volatility.
Traditional markets echoed the cryptocurrency selloff, with U.S. stock futures declining approximately 1% and the 10-year Treasury yield surging to 4.63%. The dollar index strengthened by 0.5%, while Gold prices retreated more than 1%, demonstrating the broad market impact of the inflation surprise.
Market analysts now suggest that rather than discussing rate cuts, attention might shift toward potential rate hikes in 2025, potentially testing bitcoin’s support at the $90,000 level. This marks a significant shift in market sentiment from the optimistic outlook that dominated early 2024 trading.
✅ Follow BITNEWSBOT on Telegram, Facebook, LinkedIn, X.com, and Google News for instant updates.
Previous Articles:
- Bitcoin Whales Emerge as Critical Support Level Despite Price Stagnation Below $100K
- Bitcoin Coinbase Premium Turns Negative First Time Since February Crash
- Austrian Crypto Platform Bitpanda Gets Green Light from UK Regulator, Set to List 500+ Digital Assets
- Swiss Stock Exchange SIX Launches Service to Accept Crypto as Trading Collateral
- Goldman Sachs Doubles Down on Bitcoin: $1.57B ETF Holdings Mark Major Wall Street Shift