Bitcoin Briefly Drops Below $95,000 As Inflation Fears Reignite

Bitcoin, the world's leading cryptocurrency, briefly dipped below the $95,000 mark on February 13, 2025, as investors grappled with rising inflation concerns. The price drop came after the release of US inflation data, which exceeded market expectations, sparking a sell-off across crypto markets.

The Consumer Price Index (CPI) for January 2025 rose 3.0% year-over-year, surpassing economists' forecasts of 2.9%. Core inflation, which excludes food and energy prices, increased 3.3%, higher than the projected 3.1%. This higher-than-anticipated figure sparked selling across crypto markets, with altcoins also declining.



The inflation report follows Federal Reserve Chair Jerome Powell's testimony to the Senate Banking Committee, where he emphasized a measured approach to monetary policy. Powell maintained there was "no rush" to cut interest rates while reaffirming the Fed's 2% inflation target. However, Senator Elizabeth Warren called for rate cuts at the March meeting, citing concerns about potential economic harm from continued monetary tightening.

The headline CPI reading increased from December's 2.9%, suggesting the Federal Reserve might maintain its restrictive policy stance longer than previously expected. Bitcoin, often seen as a hedge against inflation, has struggled to maintain that narrative in recent months. The crypto market remains highly sensitive to US economic data and Federal Reserve policies.



Bitcoin's growing correlation with the Nasdaq 100 signals more sensitivity to economic data. On January 15, Bitcoin's correlation with the Nasdaq index surpassed 0.70, a level not seen since 2023, Bloomberg data shows. This prediction comes a day after Bitcoin's correlation with the Nasdaq index surpassed 0.70, a level not seen since 2023, Bloomberg data shows.

Bitcoin's price is growing increasingly correlated with developments in the traditional financial system. Ryan Lee, chief analyst at Bitget Research, said Bitcoin's recent dip below $92,500 stemmed largely from concerns about the Federal Reserve's tightening monetary policy for 2025. Bitcoin's dip stems primarily from strong US economic data pointing toward potential interest rate hikes. This development makes cryptocurrencies less attractive as investments, while the Federal Reserve's signals of tighter monetary policy further intensify market corrections.

In conclusion, Bitcoin's recent price drop aligns with broader market trends, particularly in relation to inflation fears and geopolitical uncertainties. The higher-than-expected inflation could trigger equity market volatility, potentially dragging Bitcoin lower. Bitcoin's growing correlation with the Nasdaq 100 signals more sensitivity to economic data, and Bitcoin's price is growing increasingly correlated with developments in the traditional financial system.