U.S. Inflation Data Surprises, Bitcoin Dips Below $95,000
Both the headline and core rates of inflation rose faster than expected in January.
What to know:
- U.S. CPI rose unexpectedly by 0.5% in January. The annual rate was 3% against an expected 2.9%.
- Core CPI increased by 0.4% monthly and jumped to 3.3% year-over-year.
- Bitcoin’s value fell sharply after the report was released.
U.S. inflation figures surged unexpectedly in January, adversely affecting both crypto and traditional financial markets. The significantly monitored Consumer Price Index (CPI) showed an increase of 0.5% in January, surpassing forecasts which anticipated only a 0.3% rise.
- The year-over-year CPI soared to 3.0%, higher than the expected 2.9%.
- Additionally, the core CPI, excluding food and energy, rebounded by 0.4%, indicating inflation is not abating.
Following the disappointing data, Bitcoin (BTC) experienced a dramatic drop, falling below the $95,000 mark. During the last 24 hours, the broader CoinDesk 20 Index fell by 2.9%.
In the wake of the report, U.S. stock index futures dropped approximately 1%, with the 10-year Treasury yield rising to 4.63%. Gold prices decreased by over 1%, while the dollar index saw a 0.5% increase.
Despite initially spiking past $100,000 following Donald Trump’s election victory in November, Bitcoin has since fluctuated between $90,000 and $109,000 over the past two months. Factors such as AI-related concerns in China, trade war threats, and sustained high interest rates due to economic strength and inflation have contributed to this price stabilization.
During a recent congressional testimony, Federal Reserve Chairman Jay Powell reiterated that further rate cuts from the central bank are unlikely unless the economy or inflation experiences unexpected downturns. Today’s inflation data may trigger market preparations for potential rate hikes in 2025 and could push Bitcoin back toward the $90,000 threshold.
