Bitcoin price drops $1.6K on hot CPI as markets slow Fed rate
Bitcoin (BTC) saw sharp losses on Wall Street on February 13 as US inflation data weighed on assets.
Fed's March rates will be “off” after warm CPI.
Data from Cointelegraph Markets Pro and TradingView showed that BTC was down 3.8% on the day, with Bitstamp down at $48,435.
Bitcoin reacted badly to the January Consumer Price Index (CPI) publication, which was higher than expected.
Month-on-month CPI came in at 0.3%, year-on-year figure at 3.1% – 0.1% and 0.3% above estimates, respectively.
“The shelter index continued to grow in January, increasing 0.6 percent and contributing more than two-thirds of the monthly increase. The food index increased 0.4 percent in January, while the food at home index increased 0.4 percent and the food away from home index increased 0.5 percent over the month,” the U.S. Bureau of Labor Statistics said. Bureau read an official press release.
“In contrast, the energy index fell 0.9 percent during the month, largely due to a decline in the gasoline index.”
Markets immediately began to reassess the possibility of the Federal Reserve cutting interest rates, changing their timing from March to the end of the year.
The latest data from the CME Group's FedWatch Tool put the March rate cut at just 8.5%, compared with 17.5% on February 12.
“This inflation reading was much hotter than expected across the board,” marketing resource Kobeissi Letter wrote in part in response to X (formerly Twitter).
“Core CPI was expected to fall and it didn't, CPI inflation came in at 20 bps higher than expected. The March price drop is probably gone.
Kobeisi added that avoiding premature devaluations that have boosted risk assets, including cryptocurrencies, is the Fed's “top priority.”
Inflation steals attention from Bitcoin ETFs
The resumption of flows into the space Bitcoin exchange-traded funds (ETFs), meanwhile, did little to steady the ship for Bitcoin.
Related: 2021 All-Time High Bitcoin OG Will See $600K BTC Value By 2026
$49,000 was not available at the time of writing; That's because the day's flow from Grayscale Bitcoin Trust (GBTC) totaled 2,400 BTC ($117 million), according to crypto data firm Arkham.
Pinning the numbers to X, prominent trader Diane CryptoTrades acknowledged continued positive trends for ETF inflows.
“$GBTC outflows have been relatively low, while other ETFs have been ramping up their purchases recently. Yesterday's ETF net flows saw another big increase of +$493m,” he wrote.
This equates to $1.4B in net revenue over the past 3 trading days. We now have 12 consecutive positive days of net flow.
The difference between GBTC's share price versus Bitcoin's – known as net asset value, or NAV – turned positive last week for the first time in nearly three years.
This article does not contain investment advice or recommendations. Every investment and business activity involves risk, and readers should do their own research when making a decision.
