Bitcoin falls more than 3% following stronger-than-expected US inflation report

Bitcoin’s recent rally came to an abrupt halt as recent U.S. inflation data beat expectations, sparking concerns about the Federal Reserve’s next move. later Reached new all-time high (ATH) of $72,709Immediately after the U.S. Consumer Price Index (CPI) report was released on Tuesday morning, the price of BTC fell more than 3%, falling below $70,000.

CPI, a key indicator of inflation, rose 3.2% last month compared to the same period last year, higher than the 3.1% rise in January, the government announced. The increase was slightly above the 3.1% expected and caused anxiety among investors who had been hoping for a more positive report. Even more surprising is that core CPI, which excludes volatile food and energy prices, fell slightly to 3.8% from 3.9% in January, but was still higher than the forecast of 3.7%.

Month-on-month figures also showed continued high inflation, with both CPI and core CPI rising 0.4%. The former meeting and the latter exceeded expectations.

These inflationary pressures are casting a shadow over cryptocurrency markets, particularly affecting Bitcoin, which showed signs of recovery after a poor weekend. The decline following the CPI release highlights the digital currency’s sensitivity to macroeconomic indicators, particularly those affecting interest rate expectations and monetary policy.

Jyotsna Hirdyani, Head of South Asia at Bitget, pointed out the important link between US inflation data and market dynamics, noting that expectations of the Federal Reserve’s interest rate decision have been an important driver of market sentiment.

“At the macro level, the US CPI inflation announcement could stimulate markets as investors still expect a rate cut, but the Fed’s stance on interest rates remains uncertain,” Hirdyani said.

Entering 2024, market participants initially expected the U.S. Federal Reserve (Fed) to begin cutting interest rates as early as March, with five to six cuts expected throughout the year. However, resilient economic growth and inflation rates consistently above the Fed’s 2% target have caused these expectations to be recalibrated. that much CME FedWatch Tool This now suggests that the expected start of interest rate cuts has been postponed to the summer, reflecting growing uncertainty about the central bank’s policy trajectory in the face of persistent inflation.

Therefore, this latest CPI report not only influences Bitcoin’s immediate trajectory, but also sets a cautious tone for financial markets as a whole. The coming weeks, especially the Federal Reserve’s March meeting, will be critical in determining the direction of both traditional and digital asset markets as investors readjust their expectations in light of inflation data.

Also Read: Bitcoin Miners Daily Profit Hits Highest Amid Price Rise in 2024