Bitcoin Experiences Decline After Higher Than Expected Inflation Report
The Bureau of Labor Statistics reported a 0.5% rise in January’s CPI, leading to a drop in Bitcoin’s price by nearly 2%. Concerns about inflation are heightened by proposed tariffs from former President Trump. The cryptocurrency market has seen slower growth, with Bitcoin only up 0.58% year-to-date, anxiously awaiting the Federal Reserve’s decisions in March.
The Bureau of Labor Statistics (BLS) reported a 0.5% increase in the Consumer Price Index (CPI) for January, surpassing analyst expectations. The year-over-year CPI climbed to 3.0%, a rise from December’s 2.9%. Additionally, the Core CPI, which excludes food and energy prices, increased to 0.4%, exceeding predictions of 0.3%, while its year-over-year growth reached 3.3%.
Following the CPI announcement at 8:30 AM, Bitcoin’s price experienced a significant decline of nearly 2%, falling from approximately $96,600 to just above $94,000, before beginning a gradual recovery. This trend mirrors Bitcoin’s past performance during the pandemic, particularly when inflation peaked at 9.1% in June 2022, causing a sharp decline from nearly $70,000 to $15,000.
Market apprehensions regarding inflation are exacerbated by former President Trump’s threats to impose 25% tariffs on major trading partners and additional tariffs on Chinese goods. The cryptocurrency market has started slower than expected this year, with Bitcoin showing only a 0.58% increase despite last year’s impressive growth of 119.5%.
The upcoming Federal Reserve Open Market Committee meeting on March 19th-20th will be significant, especially with rising inflation pressures. Following a substantial interest rate hike in 2024 in response to a strengthening economy, analysts predict that the Fed will likely maintain its current interest rates in the next meeting according to the CME’s Fedwatch tool, with 97.5% of traders anticipating stability in rates.
In summary, the recent CPI report has negatively impacted Bitcoin’s value, echoing previous inflation-related trends. Concerns over future inflation and economic policies contribute to the volatility in the cryptocurrency market. The Federal Reserve’s upcoming decisions will be critical in shaping market sentiments, particularly regarding interest rates amidst inflationary pressures.
Original Source: unchainedcrypto.com
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