Bitcoin Faces CPI Shock—Research Firm Says ‘Buy The News’

Bitcoin and the broader crypto markets confronted a jolt on January 12 after the most recent US Shopper Worth Index (CPI) information got here in hotter than anticipated. The shock despatched Bitcoin briefly downward earlier than bouncing again, spurring a variety of reactions amongst merchants and analysts.

The US Bureau of Labor Statistics launched figures exhibiting a 0.5% month-over-month rise in CPI, putting annual inflation at 3.0%—above the beforehand anticipated 2.9%. In the meantime, Core CPI (excluding risky meals and power prices) grew by 0.4% month-over-month, settling at a 3.3% annual fee and equally surpassing consensus forecasts.

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Shortly earlier than the info went stay, Bitcoin noticed a fast drop of -2.1% to $94,250, which some market observers speculate may be tied to merchants or insiders receiving an early trace of the inflation overshoot. Nonetheless, the downturn proved momentary; costs rebounded to highs of $98,100 as fearful retail merchants watched the market response unfold.

A ‘Purchase The Information’ Occasion For Bitcoin?

Santiment, an on-chain evaluation agency, weighed in on the volatility in a weblog publish dated February 13. In an replace titled “CPI Catching the Crowd’s Eye…”, Brian Quinlivan, Director of Advertising at Santiment, famous that market members have grow to be acutely delicate to any inflation information, particularly given the turmoil of the previous couple of years.

Citing a 15-month excessive in CPI-related discussions throughout social channels like X, Reddit, Telegram, 4Chan, Bitcointalk, and Farcaster, Santiment highlighted the magnitude of merchants’ apprehension: “Initially, simply earlier than the CPI Report was introduced, Bitcoin briefly dropping -2.1% to $94,250 earlier than recovering barely. This very nicely might have been some giant insiders that have been getting wind of the excessive inflation information forward of time. Nonetheless, costs shortly recovered to as excessive as $98,100 as retails have been exhibiting concern.”

The publish additional defined that the shock of this CPI launch has reignited fears linked to Federal Reserve coverage adjustments. After reducing charges all through 2023 and 2024, the Fed abruptly halted additional cuts in November 2024.

Santiment warns this would possibly sign a chronic interval with out further fee reductions: “Now that inflation numbers are concernedly excessive within the US, many are predicting that it is going to be fairly a very long time earlier than we see additional cuts, which historically profit the markets. The speed rises in 2022, which have been largely attributed to the large crypto correction, are nonetheless recent in peoples’ recollections.”

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Regardless of the prospect of prolonged financial tightening, Santiment noticed a possible contrarian sign involving Bitcoin holder counts: “We’ve got already been seeing a decline in complete holders on the Bitcoin community, and that is typically a bullish sign. A perfect situation could be for small merchants to overreact to this information, permitting whales and sharks to scoop up extra cash and ship costs skyrocketing. Based mostly on the early worth rebounds following the information, this can be shaping as much as be a ‘promote the rumor, purchase the information’ situation.”

Market watchers past Santiment have additionally chimed in. Tom Dunleavy, Accomplice at MV International, additionally provided an optimistic tackle the info, particularly noting the function of shelter prices: “The important thing driver of this sizzling CPI print was housing (1/3 of headline and 40% of core inflation). This studying is massively lagged by virtually a 12 months. Nothing to fret about as extra actual time readings present housing flat to falling in main markets,” he remarked by way of X.

For a lot of merchants, the burning query stays: Will this “sizzling” CPI studying mark the beginning of a brand new inflationary development—or is it merely a quirk of delayed information? Santiment’s suggestion of a doable “promote the rumor, purchase the information” dynamic displays how swiftly sentiment can shift in a crypto market typically pushed by momentum and social consensus. In the meantime, Dunleavy’s housing-focused breakdown underscores that headline inflation numbers could be misleading with out dissecting the underlying parts.

At press time, BTC traded at $96,028.

Featured picture created with DALL.E, chart from TradingView.com