Higher-than-expected inflation data preceded a correction Tuesday morning that pushed Bitcoin (BTC) below the $50,000 price level.
According to the Bureau of Labor Statistics, the U.S. Consumer Price Index (CPI) rose 0.3% in January, up 3.1% year over year and down from 3.4% in December.
The Numbers were hotter than the 0.2% that analysts expected, and expectations of a Fed rate cut in the coming months are now under pressure, putting pressure on risky assets like BTC and stocks, which are also on their way to the largest daily correction of the year.
Peter Cardillo, chief market economist at Spartan Capital Securities, told According to Reuters, the potential for rate cuts has likely moved further into the future.
“If this continues while inflation remains high for another month or two, you can kiss the June rate cut goodbye and we’re probably looking at September… It’s a better-than-expected report and it’s part of what the Fed has done. what it is referring to when it says it is too early to say that inflation has been defeated.”
The sell-off has resulted in a rise in the dollar, with the dollar index (DXY) reaching new highs this year.
According to the founders of on-chain analytics company Glassnode, the dollar’s strength is driven by expectations that a Fed cut will be delayed. The analysts, who use Negentropic on the social media platform
“What’s Behind the US Dollar’s Rise?
The USD ends another week on a high and rises for the fourth week in a row, to above 104.00.
- The rally is fueled by delayed expectations for Fed easing, now expected in May or June.
- However, the upcoming CPI numbers and Fed commentary could impact the short-term outlook.
- Any sign that inflation is approaching 2% could shift expectations for rate cuts, potentially impacting the DXY and paving the way for a BTC rally.
Conclusion:
While we wait for CPI data and updates from the Fed, the trajectory of the USD remains uncertain, impacting both the currency markets and assets like Bitcoin. Stay tuned for possible future shifts.”
At the time of writing, Bitcoin is trading at $48,735, down 2.7% on the day.
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