Bitcoin Falls Below $95K as US Inflation Exceeds Expectations

Bitcoin and the broader cryptocurrency market saw a sharp decline on Wednesday following the release of higher-than-expected U.S. inflation data, raising concerns over the macroeconomic environment and its impact on digital assets.

The price of Bitcoin briefly dropped below $95,000 after the U.S. Bureau of Labor Statistics (BLS) reported a 3% year-over-year increase in the Consumer Price Index (CPI) for January 2025, surpassing expectations by 0.1 percentage points. The monthly CPI rose by 0.5%, exceeding the Dow Jones forecast by 0.2% and marking the largest single-month inflation increase in a year.

Trump Calls for Interest Rate Cuts Amid Inflation Concerns

The latest inflation data reignited political and economic debates, particularly as President Donald Trump reiterated his call for lower interest rates.

“Interest rates should be lowered, something which would go hand in hand with upcoming tariffs! Let’s Rock and Roll, America!” Trump posted on Truth Social shortly after the CPI data was released.

Trump’s statement came just a day after Federal Reserve Chairman Jerome Powell pushed back against immediate rate cuts, suggesting that the Fed would take a measured approach.

“With our policy stance now significantly less restrictive than it had been and the economy remaining strong, we do not need to be in a hurry to adjust our policy stance,” Powell stated.

Trump has been a vocal critic of Powell and the Federal Reserve’s policies, accusing them of failing to curb inflation effectively. In late January, he blamed the Fed for mismanaging inflation and bank regulation, and on January 25, he claimed he would “demand that interest rates drop immediately” if given the opportunity.

Assessing the Inflation Spike: The Role of Tariffs and Seasonal Trends

The unexpected rise in inflation has sparked speculation about its underlying causes. However, Nic Puckrin, founder of The Coin Bureau, argued that the increase aligns with historical seasonal price trends for January and is not necessarily linked to Trump’s tariffs.

“It would be an error to attribute this to President Trump’s tariffs,” Puckrin explained, adding that Trump’s economic policies could even have an “unexpected disinflationary effect.”

Despite market jitters, analysts believe the latest CPI data is unlikely to impact the Federal Reserve’s interest rate decision in March. Instead, the central bank is expected to focus on two key economic indicators:

• Unemployment data (March 7, 2025)
• Personal Consumption Expenditures (PCE) Index (February 28, 2025)

“I wouldn’t be surprised if the latter [PCE data] comes in lower than expected, easing concerns over the impact of Trump’s tariffs,” Puckrin noted.

Bitcoin Faces Macroeconomic Headwinds

Rising inflation poses a challenging environment for risk assets, including Bitcoin and other cryptocurrencies. According to a report from crypto analytics firm Steno Research, Bitcoin is likely to face further selling pressure as investors weigh the risks of a tighter economic landscape.

Conversely, historical trends suggest that rate cuts have been associated with increased inflows into crypto investment products. If the Fed eventually pivots to a more accommodative monetary policy, Bitcoin could see renewed investor interest and price recovery.

For now, Bitcoin’s near-term trajectory remains uncertain, as investors and policymakers await further economic data that will shape the Federal Reserve’s next move in the ongoing inflation battle.