Bitcoin (BTC), which was already trending downwards due to escalating geopolitical tensions following Donald Trump’s proposed tariffs, reacted strongly to the hotter than expected US Consumer Price Index report. It dropped from $96,600 down to $94,088. BTC had already been trending down due to the increasing geopolitical tensions after Donald Trump’s proposed tariffs. tariffs All imports of aluminum and steel are subject to a duty.
Bitcoins Slumps amid Surprising inflation Data
Inflation data from the US came out higher than expected, which led to a decline in cryptocurrency and equity markets. CPI grew by 0.5%, not the 0.3% expected. This is a significant increase compared with December’s CPI reading of 0.4%.
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The inflation rate increased by 3% year over year (YoY), which was higher than the forecasted 2.9%. CPI, for those who are unfamiliar with it, measures the change in average prices of goods and services that consumers have paid over time. This is a major indicator of the inflation rate.
Meanwhile, Core CPI – which excludes food and energy costs – rose by 0.4% in January, surpassing the expected 0.3% gain. Core CPI grew 3.3% year-on-year, above the expected 3.1%.
In response, US stock futures fell roughly 1% following the release of the report. The 10-year Treasury yield increased by 10 basis points, to 4.63%. Meanwhile, the Dollar Index (DXY), a measure of the dollar’s strength, rose 0.5%.
Can there be more negatives ahead?
Markets are pricing in the Federal Reserve to make fewer, or even no further interest rate cuts for the rest of 2025. Walter Bloomberg is a financial reporter who wrote X posts. noted:
Capital Economics’ Paul Ashworth believes a reduction this year is becoming increasingly unlikely. “With tariffs likely to keep core PCE inflation close to, or above, 3% this year now, the Fed will stand pat for at least the next 12 months.” Treasury yields have jumped in response to the inflation figures and continue to hold their gains. The 10-year Treasury is at 4,651% on track for its highest closing since mid-January.
Reduced likelihood of interest rate cuts increases downside risk to risk-on assets such as BTC. Federal Reserve chair Jerome Powell, who testified yesterday before Congress, added to the uncertainty by stating that rate cuts are unlikely for the near future.
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HurryNFT Crypto Analyst Shared insights BTC price movements following CPI release. The analyst pointed out that, while the Fed’s inflation target is 2%, Trump continues to push for rates cuts in order to boost the economy.
BTC may fall to as low as $92,000 if the Federal Reserve continues its friction with Trump. Moreover, recent US employment statistics are also a factor. report Bitcoin’s value was little supported.
A recent CryptoQuant study suggests the opposite. report BTC is expected to surge between $145,000 and $249,000 in the Trump Administration. BTC was trading at $95,240 as of press time. This is an increase of 0.8% over the last 24 hours.
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Source: www.newsbtc.com
