Bitcoin fell to US$48,552 following the release of the U.S. January inflation data, which came in hotter than expected.
The Consumer Price Index (CPI), a key inflation indicator that tracks the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services, rose 3.1% in the 12 months to January, higher than the 2.9% market expectation.
The increase in the CPI suggests that inflation is not cooling down as anticipated, which could influence the Federal Reserve’s decisions on interest rates.
Bitcoin is often seen as a hedge against inflation. However, the immediate market reaction suggests that investors are concerned about the potential for increased interest rates, which could strengthen the U.S. dollar and make riskier assets like Bitcoin less attractive.
Despite the drop, Bitcoin price has surged by 12.5% over the past week. Yesterday, it briefly surpassed US$50,000 for the first since December 2021.