Following the release of hotter-than-expected inflation data in the United States, the cryptocurrency market witnessed a sharp decline, with its total market capitalization dropping by over $60 billion. The core consumer price index (CPI) rose by 0.4% from December, surpassing forecasts and marking its highest increase in eight months. This data, reported by Yahoo Finance, has diminished hopes for a Federal Reserve interest rate cut in March, potentially leading to discussions about resuming rate hikes. Consequently, the S&P 500 index experienced a decrease of over 1%, and yields on 10-year Treasurys surged by 0.109% to 4.279%. Bitcoin’s price also dropped by over 2%, falling below the $50,000 mark to $48,600, while the total market capitalization of the cryptocurrency space declined by $60 billion to $1.78 trillion.
Charles Schwab’s chief fixed-income strategist, Kathy Jones, suggested that the Federal Reserve may view the data as “another reason to wait until May or June” before considering a potential reduction in interest rates.
Although certain items continued their deflationary trajectory, escalating expenses in essential sectors such as food, car insurance, healthcare, and housing remained worrisome. Notably, shelter costs alone accounted for over two-thirds of the overall inflation surge, according to the data.
Additionally, outpatient hospital services and pet care experienced record monthly price hikes. Conversely, used car prices witnessed their sharpest decline since 1969 due to a methodology update, while broader goods and energy prices continued to decrease.
Meanwhile, Bitcoin’s price recently surpassed $50,000, propelled by the launch of spot Bitcoin exchange-traded funds (ETFs) in the US last month, which continue to attract significant inflows.
Data indicates that these ETFs have generated approximately $3 billion in net inflows since their launch, despite the Grayscale Bitcoin Trust, which recently transitioned into a spot ETF, recording over $6 billion in outflows.
Over the past week, cryptocurrency investment products garnered $1.11 billion in inflows, with Bitcoin-focused products constituting 98% of the total inflows, exceeding $1 billion. Products offering exposure to Ethereum ($ETH) and Cardano ($ADA) also demonstrated notable performance.
