Crypto market recovers after CPI data and Trump’s diplomatic efforts.
CPI Data Sparks Market Volatility
The U.S. Bureau of Labor Statistics reported that the Consumer Price Index (CPI) rose 0.5% in January, exceeding expectations of 0.3%. On an annual basis, CPI increased by 3.0%, while Core CPI, which excludes food and energy prices, climbed to 3.3% year-over-year, surpassing the 3.1% forecast.
Inflation Dampens Rate Cut Prospects
Higher-than-expected inflation has led investors to believe that the Federal Reserve may implement only one rate cut in 2025, with a potential pause in rate adjustments until 2026. This outlook initially led to a decline in Bitcoin and the broader crypto market, as risk assets tend to perform better in low-interest-rate environments.
Bitcoin and Altcoins See Gains
Following the CPI release, Bitcoin briefly declined but rebounded as former President Donald Trump initiated diplomatic discussions with Russian President Vladimir Putin and Ukrainian President Volodymyr Zelenskyy to end the Russia-Ukraine war. Bitcoin surged above $97,000, approaching the $100,000 psychological resistance level.
Crypto Market Correlation with Stocks
The S&P 500 also saw gains, highlighting Bitcoin’s increasing correlation with the stock market, a trend observed throughout 2024. Major altcoins followed suit, with XRP, BNB, Cardano, and Dogecoin posting gains of 2%, 9%, 3%, and 5%, respectively.
Trump’s Pro-Crypto Stance
Since taking office, Trump has enacted executive orders aimed at fostering a favorable regulatory environment for digital assets. His continued support for crypto-related policies could counterbalance the effects of inflation concerns, potentially driving further market growth in 2025.
AI Tokens Lead Market Surge
The Artificial Intelligence (AI) token sector also saw notable gains. Near Protocol (NEAR) rose by 6%, while Internet Computer (ICP) climbed 5%, reflecting increased investor confidence across various blockchain sectors.
Market Outlook
With the potential resolution of the Russia-Ukraine conflict and Trump’s pro-crypto policies, the crypto market could maintain its recovery despite uncertainties surrounding inflation and interest rates.
Disclaimer:
The information provided on 13Desk is for informational purposes only and should not be considered financial advice. We strongly recommend conducting your own research and consulting with a qualified financial advisor before making any investment decisions. Investing in cryptocurrencies carries risks, and you should only invest what you can afford to lose. 13Desk is not responsible for any financial losses incurred from your investment activities.
