According to CoinDesk: Bitcoin's value fell by roughly 2% following the release of January's hotter-than-expected U.S. inflation data, decreasing hopes of imminent interest-rate cuts. The report exhibited a 3.1% annual inflation rate, which surpassed analysts' predictions, causing Bitcoin to drop to $48,800.
CME's FedWatch Tool showed that expectations of a rate cut in May decreased from 52% to 34%. Craig Erlam from OANDA commented that while the inflation surge has short-term detrimental effects, it will not significantly "dampen the mood" in the crypto market.
Bitcoin, the largest cryptocurrency by market cap, slipped approximately 2% to $48,700 from slightly over $50,000 earlier in the day. Meanwhile, the crypto index CoinDesk 20 (CD20) lost 2.4%. Cryptocurrencies somewhat reversed the decline later in the day, with Bitcoin recovering to $49,100, although most CD20 constituents continued to show a 2%-3% decrease over the past 24 hours.
U.S.-listed crypto-focused stocks plummeted when the markets opened, before recovering some of their losses later in the afternoon. Coinbase (COIN) and MicroStrategy shares declined by about 3% from Monday's closing price, while Bitcoin miners Marathon (MARA) and Riot Platforms (RIOT) decreased by around 5% and 2%, respectively.
The drop in prices occurred after the January CPI report indicated a 3.1% YoY inflation, faster than the 2.9% analysts had anticipated. Consequently, market participants now see a reduced chance of the Federal Reserve cutting interest rates in May. Traditional markets also felt this impact, with the 10-year U.S. Treasury bond yield increasing by 12 basis points.
