Bitcoin crashed yesterday following the release of last month’s US inflation figures. The price hit a local low of $94,091 on Bitstamp after news that inflation in the United States was higher than expected. However, BTC has since recovered and is trading above $97,000.
US inflation hotter than expected
The consumer price index (CPI) for January rose by 0.5% month-on-month, a significant 0.2% above the 0.3% expected. On an annual basis, inflation was 3%, while analysts had expected 2.9%.
In other words, we can probably do without interest rate cuts by the US Federal Reserve in the coming months, because that is exactly what is not on their agenda at the moment. For this reason, BTC initially reacted with a drop in price.
But was this inflation figure really that bad? First, it remains to be seen whether this is a sustained increase in inflation. Donald Trump has only just taken office and US industry, for example, is making large purchases out of fear of the consequences of his trade policy.
Such factors may lead to an increase in inflation in the short term, but this may not be permanent.
Moreover, given current economic growth of nearly 3%, the robust labor market and ongoing inflation problems, it has long been clear that we cannot expect many interest rate cuts in 2025.
Bitcoin at a crucial turning point
In the coming days, it will be interesting to see how Wall Street reacts to the high inflation figures. Will the markets raise the alarm and prices fall, or will they wait another month for confirmation before taking a clear direction?
So far, the market seems to have recognized that while the increased inflation numbers are not good, they do not represent a catastrophe that will immediately end the bull market.
Crypto Chase is calling it a “do-or-die” moment for BTC. He has placed buy orders at $80,000 in case BTC falls to that level again in the coming weeks.
$BTC update
Still in, all local lows swept. Pretty do or die around here I'd say. 80K's bids from the video are set in case we crash through the lows. https://t.co/b1OVhATtKn pic.twitter.com/PKTW7ADIex
— Crypto Chase (@Crypto_Chase) February 12, 2025
