Bitcoin’s (BTC) plunge today, February 12, 2025, can be attributed to a combination of macroeconomic factors, market sentiment, and specific events related to the cryptocurrency sector. Below are the main reasons that explain the drop:
📢1. US Inflation Data (CPI)
- The U.S. Consumer Price Index (CPI) released today showed higher-than-expected inflation, rising 0.5% in January, above the forecast of 0.3%. The CORE index, which excludes food and energy, also rose 0.4%, beating expectations.
- This has raised concerns among investors as a higher CPI could prompt the Federal Reserve (Fed) to maintain or even raise interest rates, reducing appetite for risk assets like Bitcoin.
📢2. Remarks by Fed Chairman Jerome Powell
- Fed Chairman Jerome Powell has rejected the idea of quantitative easing in the near term, saying QE would only be considered if interest rates fell to zero. Rates are currently at 4.5%, and the market expects a cut only in 2025.
- This more conservative stance by the Fed discouraged investors, who were expecting a more flexible monetary policy to boost risk assets.
📢3. Market Sentiment and Liquidations
- The cryptocurrency market saw significant sell-offs, with Bitcoin losing 2% to hit a low of $95,489. Altcoins such as Dogecoin (DOGE) and Solana (SOL) also saw sharp declines.
- Coinbase premium, a gauge of US investor sentiment, turned negative, signaling caution ahead of the CPI release.
📢 4. Volatility and Selling Pressure
- Bitcoin is in a consolidation phase with critical support at $93,630 and resistance at $99,500. The negative divergence on the Relative Strength Index (RSI) suggests there is room for further declines in the near term.
- Uncertainty over US trade policies and geopolitical tensions also contributed to the volatility.
📢5. Impact of a Strong Dollar
- The US dollar strengthened after the CPI data, which usually puts pressure on the prices of risk assets, including Bitcoin. Investors are monitoring potential reversals in the dollar, which could ease pressure on cryptocurrencies.
📢Conclusion
Bitcoin’s decline today reflects a combination of macroeconomic factors, such as higher-than-expected inflation in the US, the Fed’s conservative stance, and the strengthening of the dollar. In addition, cautious sentiment among investors and market volatility contributed to the decline. BTC’s next moves will depend on how the market reacts to the economic data and the Fed’s policy decisions.