The cryptocurrency market has taken a significant hit, losing over $60 billion in market capitalization following unexpectedly high inflation data in the United States.
This development has considerably cooled the anticipation of an interest rate cut by the Federal Reserve in March, sending ripples across financial markets, including Bitcoin’s valuation.
Bitcoin Drops on Higher Than Expected Inflation
The core Consumer Price Index (CPI) in the US, excluding food and energy costs, rose by 0.4% from December. It marked the largest increase in eight months and exceeded analysts’ forecasts. The CPI saw a 3.9% climb year-over-year, maintaining the previous month’s rate.
This uptick in inflation has quelled the earlier optimism for a Federal Reserve rate cut. And some analysts are now discussing the possibility of resuming rate hikes to ensure broader price stability.
For instance, Kathy Jones, Charles Schwab’s Chief Fixed-Income Strategist, suggested a delay in rate cuts. She also highlighted the role of housing costs in the CPI increase.
“The Fed will view this as another reason to wait until May or June, but the direction of trend is still lower. With much of the increase due to housing, it’s a waiting game to see when those costs will come down,” Jones said.
Read more: How to Protect Yourself From Inflation Using Cryptocurrency
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Author: Bary Rahma
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