U.S. Inflation Rises Faster Than Expected in January, Pushing Markets Lower and Bitcoin Below $95K
U.S. inflation surged unexpectedly in January, sending both crypto and traditional markets sharply lower.
The widely watched Consumer Price Index (CPI) climbed 0.5% in January, surpassing the anticipated 0.3% rise and the 0.4% increase seen in December. On a year-over-year basis, CPI rose by 3.0%, slightly above the 2.9% forecast and the 2.9% increase in December.
The core CPI, which excludes volatile food and energy prices, also came in higher than expected, rising 0.4% in January compared to the 0.3% forecast and 0.2% in December. Year-over-year, core CPI rose by 3.3%, exceeding the 3.1% forecast and the 3.2% increase from the previous month.
Already in a downward trend earlier this week, Bitcoin (BTC) dropped sharply following the disappointing inflation data, falling below $95,000. The broader CoinDesk 20 Index also fell by 2.9% in the last 24 hours.
In response to the news, U.S. stock index futures fell by around 1%, the 10-year Treasury yield rose 10 basis points to 4.63%, and gold lost more than 1%. The dollar index climbed 0.5%.
Since briefly surpassing $100,000 following Donald Trump’s election victory in November, Bitcoin has been trading within a range of $90,000 to $109,000 for more than two months. Concerns about AI-driven issues in China, trade war risks, and expectations for higher interest rates due to persistent inflation and economic strength have all contributed to tempering price movement.
During a congressional testimony yesterday, Federal Reserve Chairman Jay Powell reiterated that further rate cuts from the central bank are unlikely in the near future, unless there’s a significant downturn in either inflation or the economy.
With today’s inflation data, markets may now start to price in potential rate hikes in 2025, which could put further pressure on Bitcoin, possibly testing the $90,000 level once again.
