Bitcoin dropped as the consumer prices rose more than expected last month, indicating that the pace of inflation in January accelerated after being heterized in the past three months.
The consumer price index (CPI) rose by 3% in the 12 months to January, said the Bureau of Labor Statistics (BLS) Wednesday. Economists expected that the index, which follows price changes in a wide range of goods and services, will show an annual increase of 2.9%.
In September the annual inflation had cooled to 2.4%, according to the BLS.
“Food speeds are for the time being from the table of the table,” Grayscale’s head of research told Decrypt. “This will not be useful for Bitcoin in the short term as the markets lower the FED rate even further.”
The Bitcoin price fell to $ 94,250 on the back of the CPI print on Wednesday, 2.3% dive in 15 minutes. The prize of Ethereum and Solana also fell to $ 2,600 and $ 193 respectively, according to the data from Coetecko.
The so-called core inflation was emitted volatile food and energy prices and in January increased to 3.3% after an increase of 3.2% in the 12 months to December. Used to gauge underlying inflation trends, the measure was expected in somewhat hotter economists.
Pandl said that the report of January can be discounted to a certain extent because companies usually update their prices at the start of the new year, a phenomenon known as the January -effect that it can make it difficult for the inflation data for seasonal trends to to fit. Still, the core inflation rose 5.5% on an annual basis in January, which represents the largest increase since April 2023. Pandl said that Wednesday’s print was so hot that this year it can contribute to speculation of Fed Rake walks.
The price of Bitcoin flourished when the benchmark interest of the Federal Reserve last year was lowered from a 23-year-old high to a target range of 4.25% to 4.50%. During their last policy meeting, however, FED officials decided not to reduce, which was a relatively careful attitude last month.
Inflation has fallen considerably from a highlight of four decades of 9.1% in June 2022, but Trump’s trade war represents a wildcard because the progress of the Fed has stalled on taming inflation, according to David Hernandez, a crypto Investment specialist at 21Shares.
“They have made remarkable progress in recent years that progress is stagnating in recent months,” he said Decrypt. “The struggle of the FED against inflation is far from over, and with Trump’s rates, Powell and the FED will have to navigate carefully through the effects of new policy while the dust is settling in the coming months.”
During the FED policy meeting in December, civil servants indicated that they supervise potential shifts in trade and immigration policy as a possible barrier for repairing 2% price stability.
Yesterday for the first time in the congress for the first time since President Donald Trump’s inauguration, FED chairman Jerome Powell was peppered on Tuesday with questions about Trump’s trade war.
“It is not the task of the FED to make the rate policy or to comment,” said Powell. ‘[The Fed’s job] To try to respond to a thoughtful, sensible way. ‘
Powell claimed that the US Central Bank is willing to respond if inflation cools down or the labor market weakens. But the economy remains in solid form, he said, and the Fed does not have to “be in a hurry to adjust the interest rates”, given the cuts of last year.
Less than two weeks ago, the Commerce Department reported an increase in the price index of his personal consumption expenditure (PCE) – which in December the preferred fabeter of the FED rose and accelerated from 2.4% the month before.
Risk activa such as shares and crypto tend to thrive in the midst of lower interest rates that encourage borrowing and expenditures. At the same time, they can contribute to inflation.
On Wednesday, Trump said that “interest rates should be reduced” on the truth of the truth and say that they would “go hand in hand with upcoming rates !!!”
If the FED were to increase the prospect of tariff increases this year, that could further increase the tensions between the FED and the White House, said Pandl, describing as “something that is certainly important for markets, including Bitcoin.” When the tension starts. To look like a potential threat to Fed’s independence, Pandly said that the investors can eventually drive to Bitcoin and gold as government -resistant value stores.
At the moment, market participants have become doubtful that the Fed will greatly lower the rates in 2025.
Traders on Wednesday added a chance of more than 50% that the FED will only deliver one 25-base point speed this year, or none at all, according to CME Fedwatch.
Nevertheless, the FED will only hold its next policy meeting in mid -March. This leaves enough time for more data between the inflation print on Wednesday and the next step of officials.
Note of the editors: This story has been updated to add comments from analysts.
Published by Stacy Elliott.
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