Cryptocurrency prices dropped sharply on Tuesday as unexpected US inflation data triggered a broader sell-off across financial markets. Bitcoin fell 3% to $48,385 after hitting through the $50,000 barrier a day earlier.Â
The leading cryptocurrency was caught up in a rush to dump risk assets after US inflation came in hotter than anticipated.
Government data showed the Consumer Price Index rising 0.5% month-over-month in January, exceeding economist forecasts. The persistence of inflationary pressures raised doubts that the Federal Reserve will be able to implement expected rate cuts this year.
As a result, the probability of a March rate cut plunged from 77% a month ago to just 9% now, according to Charlie Bilello of Creative Planning. With Treasury yields climbing in response, investors pulled back from speculative assets.
Following the same movement, Ether also dropped after recently hitting one-month highs. Crypto-exposed stocks like Coinbase and MicroStrategy declined 4-5%. Bitcoin mining stocks saw losses trimmed after falling as much as 4-5% earlier. The crypto retreat shows prices reacting to monetary policy shifts indicating higher rates and benchmark yields for longer.
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