- January’s 3% CPI jump spooked markets, sinking stocks and erasing $83B from crypto’s total value in minutes.
- Peter Schiff urged a 200-basis-point Fed rate hike, calling inflation “bullish for gold” despite Bitcoin’s 2.4% drop.
The U.S. Consumer Price Index (CPI) rose 3% year-over-year in January 2025, exceeding analyst forecasts. Monthly inflation climbed 0.5%, translating to an annualized rate of 6.2%. Core CPI, excluding volatile food and energy prices, increased 3.3% compared to the previous year.
Markets reacted swiftly: S&P 500, Nasdaq-100, and Dow futures each fell over 1%. Bitcoin dropped 2.4% within 15 minutes, erasing $83 billion from the cryptocurrency market’s total value—equivalent to the entire market capitalization of BNB.
Economist Peter Schiff criticized the Federal Reserve’s response, arguing that delayed rate cuts worsen inflationary pressures. He suggested the Fed should raise rates by 200 basis points immediately to curb rising prices.
Schiff also contested the market’s initial sell-off of gold, calling inflation “bullish” for the metal. “Real rates are falling because the Fed isn’t hiking,” he wrote on social media. Higher interest rates typically reduce liquidity, pressuring speculative assets like cryptocurrencies.
Bitcoin’s role as “digital gold” faces renewed scrutiny. While some investors view it as a hedge against inflation, its sharp decline amid the CPI data underscores its volatility. Institutions such as BlackRock have previously endorsed Bitcoin as a risk-off asset, but its reaction to macroeconomic shifts remains inconsistent.
The Fed’s next steps are unclear. Investors now debate whether rate hikes, rather than cuts, could emerge—a scenario not widely anticipated until the latest data.
The crypto market’s $83 billion loss reflects broader uncertainty. ETHNews analysts note that assets tied to macroeconomic sentiment often struggle when inflation outpaces policy adjustments. Bitcoin’s drop mirrors trends in equities, suggesting overlapping investor concerns.
