Key Takeaways
- Bitcoin dropped 1.3% to $94,081 after inflation data exceeded expectations.
- The Federal Reserve signaled no urgency to cut interest rates.
- Market sentiment turned cautious, with the Fear & Greed Index in 'fear' mode.
Bitcoin dropped 1.3% on Tuesday, hitting a low of $94,081, after the US Consumer Price Index (CPI) rose 3.0% year-over-year in January.
The figure surpassed economists’ expectations of 2.9%, while core inflation—excluding food and energy—climbed 3.3%, above the projected 3.1%.
The hotter-than-expected inflation report triggered a sell-off across digital assets, with altcoins also declining.
Investors now anticipate the Federal Reserve may keep interest rates higher for longer.
Fed policy outlook
Federal Reserve Chair Jerome Powell reinforced a cautious stance during his Senate Banking Committee testimony, stating:
With our current policy stance being significantly less restrictive than before and the economy staying robust, we do not need to rush our policy adjustments.
Powell reiterated the Fed’s 2% inflation target and dismissed immediate rate cuts.
Despite calls from Senator Elizabeth Warren to lower rates in March, the rising CPI suggests the Fed is likely to maintain its restrictive approach.
Bitcoin price analysis
Often considered an inflation hedge, Bitcoin has struggled to maintain that role in recent months.
The crypto market remains highly sensitive to US economic data and Fed policies.
With inflation still above target, market sentiment has turned cautious, pushing the Fear & Greed Index back into the “fear” zone.
