The Unexpected Rise in US Inflation Fuels Concerns over Bitcoin’s Decline
The US inflation data for January has surprised the markets by showing a stronger increase than anticipated. The Consumer Price Index (CPI) rose by 0.5% for the month, surpassing the predicted 0.3% and registering a 3% increase over the year, surpassing the expected 2.9%. Meanwhile, the core CPI, which excludes volatile elements such as energy and food, rose by 0.4% for the month (against the expected 0.3%) and by 3.3% over the year, also exceeding the forecasted 3.1%.
Bitcoin Reacts Immediately to the CPI Release
The financial markets reacted negatively to these figures, suggesting that inflation remains persistent despite expectations of a slowdown. Bitcoin (BTC), already experiencing a downward trend, sharply dropped below $95,000 following the release of the data.
The traditional markets were not spared either. US stock index futures contracts lost around 1%, while the yield on 10-year Treasury bonds jumped up by 10 basis points, reaching 4.63%. Gold declined by over 1%, and the US dollar rose by 0.5%, confirming the classic flight-to-safety reaction.
A Macroeconomic Context Weighing on Bitcoin
Bitcoin, which surpassed $100,000 in November after Donald Trump’s reelection, is now trading within a range of $90,000 to $109,000 for over two months. Several factors are hindering any surge: uncertainties related to China and artificial intelligence, the threat of trade wars, and, most importantly, the prospect of high interest rates maintained by the Federal Reserve.
Just yesterday, Jerome Powell, Chairman of the Fed, reiterated before Congress that rate cuts were ruled out in the short term, unless there is a major economic reversal. The publication of these inflation figures strengthens the hypothesis of maintaining high rates and even possible increases in 2025, a scenario that weighs heavily on Bitcoin and all risky assets.
Towards a Test of the $90,000 Support Level?
The current situation could lead Bitcoin to test the key level of $90,000 again, depending on market expectations. The persistence of inflation and the potential tightening of US monetary policy remain the main forces that dictate the direction of the crypto market in the coming weeks.
