The latest U.S. Consumer Price Index (CPI) data came in hotter than expected, triggering sharp declines in both crypto and traditional markets. Headline inflation rose 0.5% in January, surpassing the anticipated 0.3%, while core CPI—which excludes food and energy—climbed 0.4% against a forecast of 0.3%.
On a year-over-year basis, CPI stood at 3.0%, slightly above the 2.9% projection. Core CPI also surprised at 3.3%, exceeding expectations of 3.1%. These figures suggest inflation remains stubbornly high, dampening hopes for early rate cuts from the Federal Reserve.
Bitcoin Dips Below $95K
Bitcoin (BTC), already in a downward trend this week, dropped sharply following the inflation report, sinking below the $95,000 mark. The CoinDesk 20 Index also shed 2.9% in the past 24 hours, reflecting the broad market downturn.
BTC has been rangebound between $90,000 and $109,000 since surging past $100,000 in November after Donald Trump’s election victory. However, concerns over AI-driven China risks, trade war fears, and persistently high interest rates have prevented further bullish momentum.
Fed Signals No Rate Cuts Soon
Federal Reserve Chairman Jay Powell, testifying before Congress, reiterated that interest rate cuts are unlikely in the near future unless the economy or inflation takes a sharp downturn. With inflation showing unexpected strength, markets are now reassessing the likelihood of rate hikes in 2025 rather than cuts.
The bond market reacted swiftly, with the 10-year U.S. Treasury yield jumping 10 basis points to 4.63%. Meanwhile, U.S. stock futures fell around 1%, gold dipped over 1%, and the dollar index climbed 0.5%.
BTC Eyes Key Support at $90K
With inflation fears mounting, Bitcoin could be set to retest the critical $90,000 support level. A break below this range may trigger further selling pressure, while a rebound could keep BTC within its long-standing range.
For now, traders are closely watching macroeconomic signals, Fed policy shifts, and geopolitical developments, all of which could dictate Bitcoin’s next major move.
