Inflation shock: Crypto and stock markets react with declines to unexpectedly high US consumer price index

<p> <strong> Inflation shock: Crypto and stock markets react with declines to unexpectedly high US consumer price index </strong> </p>
crypto markets react to higher inflation: A look at the current developments
The publication of the consumer price index (CPI) for January 2025 has strongly influenced the crypto markets and shows signs of higher inflation than expected. The CPI has increased by 0.5% compared to the previous month, which increases inflation to 3.0%. These values exceed the previous forecasts that had expected an increase of only 0.3% and an inflation of around 2.9%.
The US Bureau of Labor Statistics reported that the core CPI, which excludes energy and volatile food prices, increased by 0.4% and is 3.3% compared to the previous year. This increase was 0.1% higher than the predicted increase of 0.3%. The core value also exceeded the expected value by 0.2% with 3.1%. This accelerated inflation represents an increase that was over the past three months.
After the publication of the CPI report, the Bitcoin course dropped to $ 94,250, which represents a decline of over 2% compared to the previous day. Although the cryptocurrency has meanwhile recovered to over $ 95,500, it has remained over 1.5% in the last 24 hours. Ethereum fell by over 2% to around $ 2,600, while Solana shrank by around 3.7% to around $ 192. Other cryptocurrencies such as Doge, Sui, XRP, Link and XLM also recorded losses after the publication of the CPI report.
The market capitalization of crypto currencies has dropped, and the crypto-greed-and-anxiety index fell from 37 to 35, which indicates a concerned market mood. Despite these market turbulence, some cryptos such as BNB, Monero and Axie Infinity were able to record profits, with increases of 3.49%, 0.7%or 1.2%.
Effects on traditional markets
The effects of the CPI report were not only limited to the cryptoma market. The traditional markets also suffered relevant declines. According to the most recent data from Marketwatch, US stock futienes fell by about 1%. The Dow Jones Industrial Average dropped to 44,269 points, while the Nasdaq Composite and S&P 500 decreased by 1.1% or 1.2% to 6.028 and 21,529 points. The stock markets showed a weak opening on Wall Street, whereby the decline was primarily concerned with the large companies such as Nvidia, Meta and Amazon.
In addition, the returns for government bonds rose sharply. The 2-year return climbed to 4.37%, while the 10-year return rose to 4.65%. The Russell 2000 Index, which stands for smaller companies, fell by 1.4%, which is a higher loss compared to large companies. Economists argue that the current inflation trends may indicate future increasing inflation risks, which arouses concerns among investors and consumers.
Speculation on interest decisions of the Fed
The increase in inflation has led to speculation that the Federal Reserve could rethink its interest strategy. Since the last interest rate cuts in September 2024, the Fed has been under pressure because some analysts believe that these measures may have been premature. The crypto analyst Scott Melker expressed that he believed that the Fed had no reason to reduce interest rates because both inflation and the labor market had stabilized.
Ben Vaske, Senior Investment strategist from Orion, also emphasized that the FED should rethink its pace in interest reductions. Josh Jamner, an analyst from Clearbridge Investments, agreed and noted that the current inflation report could end the cycle of interest rate cuts. Despite these concerns, President Trump continued to spoke for interest in interest, while Fed chairman Jerome Powell remains careful in his attitude towards interest rates.
Overall, the markets are in a phase of uncertainty in terms of future monetary policy decisions and their effects on inflation and economic growth.