Bitcoin (BTC) plunged below $95,000 after fresh U.S. inflation data revealed prices rising faster than anticipated in January. The unexpected surge in the Consumer Price Index (CPI) sent shockwaves through financial markets, dimming hopes of early interest rate cuts by the Federal Reserve.

CPI Numbers Exceed Forecasts

The latest CPI report showed a 0.5% month-on-month increase, surpassing the 0.3% estimate and December’s 0.4% growth. On an annual basis, inflation climbed 3.0%, slightly above the 2.9% expectation.

The core CPI, which excludes volatile food and energy prices, also outpaced forecasts, rising 0.4% month-on-month compared to the predicted 0.3%. Year-over-year, core inflation stood at 3.3%, exceeding both the expected 3.1% and December’s 3.2% reading.

Bitcoin and Markets React Sharply

Already on a downward trajectory, Bitcoin fell sharply after the inflation release, breaking below $95,000. The CoinDesk 20 Index slid 2.9% in the past 24 hours, reflecting the broader crypto market downturn.

Traditional markets also suffered:

• U.S. stock index futures dropped about 1%
• 10-year Treasury yields spiked 10 basis points to 4.63%
• Gold prices declined over 1%
• The U.S. dollar index gained 0.5%

Fed’s Stance Dampens Rate Cut Hopes

Federal Reserve Chairman Jay Powell reinforced a cautious monetary policy stance during his recent testimony to Congress, emphasizing that interest rate cuts are unlikely anytime soon unless inflation or economic conditions deteriorate significantly.

Following the hot CPI data, analysts now speculate that the Fed could delay cuts even further, or in a worst-case scenario, consider rate hikes in 2025—a scenario that could pressure Bitcoin and risk assets.

Bitcoin’s Rangebound Trading Faces New Test

Since hitting $100,000 in November after Donald Trump’s election victory, Bitcoin has been oscillating between $90,000 and $109,000 for over two months. While AI-driven fears over China, trade war threats, and high interest rates have capped gains, today’s inflation shock could trigger a deeper correction, possibly testing the $90,000 support level.

As markets digest the inflation report and the Fed’s stance, crypto traders will closely monitor macroeconomic signals, central bank policies, and Bitcoin’s key technical levels in the days ahead.