Bitcoin (BTC) reacted sharply to today’s hotter-than-expected US Consumer Price Index (CPI) report, dropping from around $96,600 to as low as $94,088. Notably, BTC was already trending downward due to escalating geopolitical tensions following Donald Trump’s proposed tariffs on all aluminum and steel imports.
Bitcoin Slumps Amid Surprising Inflation Data
The latest US inflation data came in higher than anticipated, triggering declines in both equity and cryptocurrency markets. Instead of the expected 0.3% increase, the CPI rose by 0.5% in January, compared to December’s 0.4% reading.
On a year-over-year (YoY) basis, inflation climbed 3%, exceeding forecasts of a 2.9% increase. For those unfamiliar, the CPI measures the average change in prices consumers pay for goods and services over time and is a key indicator of inflation.
Meanwhile, Core CPI – which excludes food and energy costs – rose by 0.4% in January, surpassing the expected 0.3% gain. YoY, Core CPI climbed 3.3%, higher than the forecasted 3.1%.
As a result, US stocks followed the crypto market downturn, with stock index futures falling roughly 1% after the report. On the other hand, the 10-year Treasury yield jumped 10 basis points to 4.63%, while the Dollar Index (DXY) strengthened by 0.5%.
Could There Be More Downside Ahead?
Following the CPI release, markets are now pricing in fewer or possibly no interest rate cuts from the Federal Reserve for the remainder of 2025. In an X post, financial journalist Walter Bloomberg noted:
Capital Economics’ Paul Ashworth thinks a cut this year looks 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 jumped on the inflation data and are holding on to their gains, with the 10-year at 4.651%, on path for its highest close since mid-January.
A reduced likelihood of rate cuts poses additional downside risk for risk-on assets like BTC. Further compounding this uncertainty, Federal Reserve Chair Jerome Powell testified before Congress yesterday, emphasizing that central bank rate cuts remain unlikely in the foreseeable future.
Crypto analyst HurryNFT shared insights on BTC’s price movement following the CPI data release. The analyst noted that while inflation remains above the Fed’s 2% target, Trump is pushing for rate cuts to stimulate the economy.
The ongoing friction between the Federal Reserve and Trump could increase market volatility, potentially pushing BTC further down to $92,000. Additionally, the recent US employment zpráva did little to support Bitcoin’s price.
On the contrary, however, a recent CryptoQuant zpráva posits that BTC may surge to anywhere between $145,000 to $249,000 under the Trump administration. At press time, BTC trades at $95,240, up 0.8% in the past 24 hours.
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