The primary inflation report of 2025 got here in hotter than anticipated, displaying a 3% enhance within the CPI for January in comparison with the earlier yr. It confirmed an uptick from December, however extra importantly, a quantity that outpaced analyst projections. Markets took the trace instantly.
Inventory futures for the S&P 500, Nasdaq-100 and Dow slipped greater than 1%. Bitcoin (BTC) didn’t escape both, falling 2.4% inside quarter-hour. The cryptocurrency market as a complete misplaced $83 billion in capitalization identical to that — roughly the scale of BNB’s complete market cap erased in moments.
So what now? The much-anticipated Federal Reserve charge reduce is trying much less and fewer seemingly. Some buyers are even entertaining a distinct situation — one the place the Fed tightens as an alternative.
Schiff speaks
Peter Schiff, identified for his blunt takes on macroeconomics, pointed to a key difficulty: the month-to-month inflation enhance was 0.5%, which, annualized, interprets to six.2%. Core CPI was not a lot better at 3.3% year-over-year. From his perspective, the Fed is falling behind, and as an alternative of charge cuts, an emergency 200-basis-point hike would make extra sense.
The knee-jerk response to promote gold on hotter than anticipated inflation information was fallacious. Rising inflation could be very bullish for gold. It doesn’t matter if charge cuts are delayed. It’s the failure of the Fed to hike charges that’s vital. With inflation rising, actual charges are falling.
— Peter Schiff (@PeterSchiff) February 12, 2025
For crypto, this might be an issue. Greater charges usually drain liquidity, and probably the most speculative belongings are inclined to endure probably the most. Bitcoin falls into that class – for some.
Others see it in another way. The asset has been labeled “digital gold,” a hedge towards inflation and even a risk-off funding by establishments like BlackRock.
If Bitcoin follows gold’s lead, it would maintain up nicely on this atmosphere. If not, it’s simply one other high-risk asset that might sink additional, alongside shares and different speculative bets.
The controversy continues. Is BTC really an inflation hedge, or does it nonetheless commerce like a tech inventory? The market will not be fairly certain. And till it makes up its thoughts, Bitcoin bulls is likely to be in for a tough trip.
