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Bitcoin (BTC) suffered sudden losses ahead of the Feb. 13 opening on Wall Street, as United States inflation data delivered a blow to risky assets.
Data from Cointelegraph Markets Pro and TradingView tracked a 3.8% decline in BTC price for the day, reaching a low of $48,435 on Bitstamp.
Bitcoin reacted negatively to the January Consumer Price Index (CPI) data, which surpassed expectations.
The month-on-month CPI stood at 0.3%, with the year-on-year figure at 3.1% — exceeding predictions by 0.1% and 0.3%, respectively.
“The index for shelter continued to rise in January, increasing 0.6 percent and contributing over two-thirds of the monthly all items increase.
The food index increased 0.4 percent in January, as the food at home index increased 0.4 percent and the food away from home index rose 0.5 percent over the month,” read an official press release from the U.S. Bureau of Labor Statistics.
“In contrast, the energy index fell 0.9 percent over the month due in large part to the decline in the gasoline index.”
Markets promptly began reevaluating the probability of the Federal Reserve reducing interest rates, postponing expectations from March to later in the year.
The latest figures from CME Group’s FedWatch Tool indicated only an 8.5% likelihood of a rate cut in March, compared to 17.5% on Feb. 12.
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“This inflation reading was much hotter than expected all around the board,” commented trading resource The Kobeissi Letter on X (formerly Twitter).
“Core CPI was expected to fall and it didn’t while CPI inflation came in 20 bps above expectations. A March rate cut is likely gone.”
Kobeissi noted that avoiding a premature rate cut, which would bolster risky assets including crypto, was the Fed’s “top priority.”
The resurgence of inflows into spot Bitcoin exchange-traded funds (ETFs) did little to stabilize Bitcoin’s situation.
$49,000 remained elusive, while outflows from the Grayscale Bitcoin Trust (GBTC) amounted to around 2,400 BTC ($117 million), according to data from crypto intelligence firm Arkham.
Despite this, popular trader Daan Crypto Trades noted positive trends in ETF flows, which were absorbing BTC supply around twelve times faster than new coins entered the market.
GBTC’s net asset value (NAV) flipped positive relative to Bitcoin for the first time in almost three years last week.
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