Crypto Market Faces Pressure as U.S. Inflation Surpasses Expectations
On February 12, 2025, new inflation data revealed a 3% annual increase, surpassing expectations, with core inflation climbing to 3.3%.
This spike has rattled investors, particularly in the crypto market, where the overall capitalization dropped by 5%, and Bitcoin fell below $95,000.
This uptick in inflation, the highest since mid-2024, is fueling fears that the Federal Reserve may tighten policies sooner than anticipated, prompting a shift toward safer investments. Crypto, known for its volatility, is seeing pressure as traders recalibrate their strategies. Many are leaving the market in search of more stable options, contributing to the growing uncertainty in the space.
READ MORE: VanEck Predicts $520 Solana Surge as Network Stability Hits Milestone
In light of this, the outlook for the crypto market remains clouded, with analysts expecting continued fluctuations until the Federal Reserve offers clearer policy direction. Yesterday, Fed Chair Jerome Powell reaffirmed his position, stating that there are no immediate plans to reduce interest rates despite calls from President Trump for more aggressive cuts to combat inflation.
The economic landscape has been further complicated by geopolitical tensions, particularly the trade war threats linked to tariffs on Canada, Mexico, and China. A significant liquidation event earlier this month saw over $2 billion wiped off the market, with some sources reporting figures even higher, rivaling the chaos of the 2022 FTX collapse. Despite a temporary reprieve from tariff hikes, the latest inflation figures are likely to prolong market instability.
As a result, Bitcoin’s Fear and Greed Index has shifted into “Fear,” with some experts, like Arthur Hayes, predicting Bitcoin could drop as low as $70,000 in the face of these ongoing macroeconomic challenges.
Alexander Stefanov
Reporter at CoinsPress
Alex is an experienced finance journalist and a cryptocurrency and blockchain enthusiast. With over five years of experience covering the industry, he deeply understands the complex and constantly evolving world of digital assets. His insightful and thought-provoking articles provide readers with a clear picture of the latest developments and trends in the market. His passionate approach allows him to break down complex ideas into accessible and insightful content. Follow up on his content to be up to date with the most important trends and topics - stay ahead of the curve with CoinsPress.
