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The first inflation report of 2025 came in hotter than expected, showing a 3% increase in the CPI for January compared to the previous year. It showed an uptick from December, but more importantly, a number that outpaced analyst projections. Markets took the hint right away.
Stock futures for the S&P 500, Nasdaq-100 and Dow slipped more than 1%. Bitcoin (BTC) did not escape either, falling 2.4% within 15 minutes. The cryptocurrency market as a whole lost $83 billion in capitalization just like that — roughly the size of BNB’s total market cap erased in moments.
Yuri MolchanSo what now? The much-anticipated Federal Reserve rate cut is looking less and less likely. Some investors are even entertaining a different scenario — one where the Fed tightens instead.
Schiff speaks
Peter Schiff, known for his blunt takes on macroeconomics, pointed to a key issue: the monthly inflation increase was 0.5%, which, annualized, translates to 6.2%. Core CPI was not much better at 3.3% year-over-year. From his perspective, the Fed is falling behind, and instead of rate cuts, an emergency 200-basis-point hike would make more sense.
For crypto, this could be a problem. Higher rates generally drain liquidity, and the most speculative assets tend to suffer the most. Bitcoin falls into that category - for some.
Others see it differently. The asset has been labeled "digital gold," a hedge against inflation and even a risk-off investment by institutions like BlackRock.
Gamza KhanzadaevIf Bitcoin follows gold’s lead, it might hold up well in this environment. If not, it is just another high-risk asset that could sink further, alongside stocks and other speculative bets.
The debate continues. Is BTC truly an inflation hedge, or does it still trade like a tech stock? The market is not quite sure. And until it makes up its mind, Bitcoin bulls might be in for a rough ride.
Tomiwabold Olajide
Valeria Blokhina
Dan Burgin
Vladislav Sopov