YEREVAN (CoinChapter.com) — Bitcoin (BTC), the largest crypto by market cap, witnessed a significant selloff, dropping from the $50,000 level, following the latest Consumer Price Index (CPI) report for January 2024. The newly released report revealed higher-than-expected US inflation rates. The core CPI, excluding volatile food and energy prices, hit a four-decade high, indicating persistent inflationary pressures.
The development raised concerns about the possibility of the Federal Reserve extending its hawkish monetary policy, which typically reduces the attractiveness of risk assets like cryptocurrencies.
The latest CPI Report for January 2024
According to the latest report, the Consumer Price Index for All Urban Consumers (CPI-U) increased by 0.3% on a seasonally adjusted basis and further rose by 3.1% over the last 12 months, not seasonally adjusted.
Moreover, the index for all items less food and energy increased by 0.4% in January (seasonally adjusted) and went up by 3.9% over the year, not seasonally adjusted.
The report also detailed changes in various categories. For example, the food index saw a notable rise, with the food away from home index increasing by 0.5% in January.
Energy prices, however, showed a decline, with the energy index falling by 0.9% in January. Specifically, the gasoline index decreased by 3.3% during the same month.
The latest core CPI numbers mark a four-decade high. However, some analysts were quick to point out that regardless of what the numbers of the report would be, the Fed would still increase borrowing rates in May.
Florida Governor Ron DeSantis of the Republican Party reacted to the “hotter than expected” CPI report, hitting out at the price increases.
“It really bites people where it counts. It bites people for housing, it bites people for transportation and it bites food. Those are the staples,”
he said, before hailing his tax reforms in the state.
Bitcoin price takes a hit
Analysts closely monitoring the inflation figures had predicted a slight slowdown. However, the actual data indicated that inflation remains a significant concern, with core inflation rates—excluding the volatile food and energy sectors—soaring beyond expectations.
Immediately, the crypto market reacted, noting a sharp decline in Bitcoin’s value. BTC price fell nearly 3% in the minutes following the CPI report’s release, hitting its lowest level since mid-September.
The price drop under $48,500 comes a day after the largest crypto reached a milestone, hitting the long-awaited $50,000 mark.
This selloff underscores the market’s sensitivity to macroeconomic indicators and central bank policies, which have a profound impact on investor sentiment and asset valuations.
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