- U.S. inflation hit 3%, catching crypto investors off guard as USDC inflows surged pre-CPI to $698M, then $1.09B post-release.
- Crypto’s link to U.S. markets tightened; Bitcoin swung from $94K to $98K post-CPI amid stablecoin liquidity shifts.
The U.S. Consumer Price Index (CPI) rose 3.0% year-over-year in January, exceeding analyst forecasts and unsettling crypto investors who had positioned themselves for milder data. Ahead of the report, stablecoin USDC saw net inflows to exchanges jump to $698 million, reflecting expectations of market opportunities.
Within 24 hours of the CPI release, this figure climbed to $1.09 billion—marking the first positive netflow in a week. The shift underscores crypto’s growing sensitivity to macroeconomic trends, particularly U.S. fiscal policy shifts.
Crypto markets now show tighter links to traditional financial systems, where U.S. economic updates trigger immediate reactions. Investors increasingly treat stablecoins like USDC as temporary shelters during uncertainty.
Elevated inflows signal readiness to deploy capital quickly, with traders treating these assets as reserves for buying cryptocurrencies.
Data from CryptoQuant reveals that large holders amplified this trend, with metrics tracking major investors’ activity rising from 3.4% to 50% in four days. Such movements suggest institutions prepared to acquire Bitcoin or other assets before the CPI announcement.
The inflation data upended assumptions
Monthly CPI climbed 0.5%, outpacing December’s 0.4% rise, while core inflation hit 3.3% annually—above the 3.1% consensus. Bitcoin initially fell to $94,000, rebounded to $98,151, then settled near $96,000.
The broader market mirrored this volatility: total crypto capitalization briefly touched $3.25 trillion before sliding to $3.20 trillion. These swings revealed limited sustained momentum, despite the pre-CPI stablecoin buildup.
The USDC surge initially hinted at bullish sentiment, as traders stockpiled liquidity for potential buys. Instead, hotter-than-expected inflation data revived concerns about prolonged high interest rates, dampening risk appetite.
For now, crypto markets remain tethered to U.S. economic indicators. The CPI surprise underscores how quickly sentiment can shift, even amid signals of institutional readiness.
