The cryptocurrency market took a hit on Feb. 12 as Bitcoin and other digital assets slipped into the red following higher-than-anticipated US inflation data.
Bitcoin (BTC) briefly dropped under $95,000 after the US Consumer Price Index (CPI) for January 2025 showed inflation at 3% year-over-year—0.1% above projections. The US Bureau of Labor Statistics reported a 0.5% rise in CPI for the month, surpassing the Dow Jones estimate by 0.2%, marking the sharpest monthly increase in a year.
Trump Pushes for Rate Cuts Amid Inflation Concerns
Following the inflation report, US President Donald Trump renewed his call for interest rate cuts. In a post on Truth Social, he wrote:
“Interest rates should be lowered, something which would go hand in hand with upcoming tariffs! Let’s Rock and Roll, America!”
His comments came just a day after Federal Reserve Chairman Jerome Powell stated that there was no rush to adjust monetary policy. Powell emphasized that with the economy still strong and policy already shifting to a less restrictive stance, the Fed would be patient in its approach to rate cuts.
Trump has been vocal in criticizing Powell and the Federal Reserve, accusing them of mishandling inflation and failing on bank regulation. In late January, he declared he would “demand that interest rates drop immediately.”
Inflation and the Impact of Trump’s Tariffs
Nic Puckrin, founder of Coin Bureau, suggested that the January inflation spike was largely due to seasonal trends rather than Trump’s tariffs. He also noted that the president’s policies might unexpectedly contribute to disinflation in the long run.
The Fed’s decision on interest rates in March is unlikely to be swayed by this CPI report alone. Puckrin highlighted that key indicators, such as unemployment figures on March 7 and the PCE (Personal Consumption Expenditures) index on Feb. 28, would carry more weight in determining the central bank’s next move.
Crypto Market Outlook
Analysts from Steno Research have previously warned that rising inflation could put downward pressure on Bitcoin, as macroeconomic uncertainty tends to weaken risk assets. However, history has shown that rate cuts often lead to increased investment in crypto products.
As the market awaits further economic data, traders will be watching closely to see if inflation concerns continue to weigh on Bitcoin’s price or if expectations of future rate cuts provide a bullish catalyst.
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