Bitcoin, Rate Cut Hopes Shattered as It Declares Entry into Bear Market

▲ Bitcoin (BTC), U.S. Dollar (USD) / ChatGPT-generated image

The cryptocurrency market, including Bitcoin (BTC), is facing strong downward pressure after U.S. inflation data came in above expectations, shattering hopes for an early interest rate cut by the Federal Reserve.

According to crypto-focused outlet Decrypt on February 12 (local time), the recently released January Consumer Price Index (CPI) rose 3.1%, exceeding market forecasts and fueling fears among investors that the high-interest-rate environment will persist longer than anticipated.

Following the CPI, the Producer Price Index (PPI) also surpassed expectations, prompting an immediate reaction from financial markets. As risk appetite cooled sharply, Bitcoin plunged below the psychologically significant $70,000 level.

The Chicago Mercantile Exchange (CME) FedWatch tool effectively ruled out the possibility of a rate cut by the Federal Reserve within the first quarter after the inflation data release. Traditional financial markets, including the Nasdaq and the S&P 500, also declined under inflationary pressure, showing a high correlation with the cryptocurrency market.

Analysts warn that if Bitcoin fails to secure support around the $66,000 level in the short term, further correction may be inevitable. In particular, large-scale liquidations in the futures market have intensified downside volatility, calling for heightened caution among retail investors.

With the influence of macroeconomic indicators growing stronger than ever, the market is closely watching upcoming remarks from Federal Reserve officials. As the pace of inflation slowdown stalls, many observers believe that Bitcoin’s price recovery could be delayed beyond earlier expectations.

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