Investing.com-- Bitcoin retreated on Wednesday after January inflation data came in hotter-than-expected, weighing on the risk sentiment in the crypto market.
The world’s largest cryptocurrency dropped around 1.9% to $95,340.0 by 09:37 ET (14:37 GMT).
Bitcoin slides lower on hot CPI report
US inflation rose more than economists expected in January, rattling both crypto and traditional markets.
The Consumer Price Index (CPI) climbed 0.5% for the month, exceeding the forecasted 0.3% and accelerating from December’s 0.4% increase. On an annual basis, CPI rose 3.0%, slightly above the anticipated 2.9% and matching December’s reading.
Core CPI, which strips out food and energy prices, advanced 0.4% in January, ahead of the projected 0.3% and doubling December’s 0.2% gain. Year-over-year, core inflation hit 3.3%, surpassing expectations of 3.1% and edging up from 3.2% the prior month.
Speaking before Congress yesterday, Federal Reserve Chairman Jay Powell reaffirmed that further rate cuts are unlikely in the near future unless the economy or inflation takes an unexpected turn.
Following today’s inflation data, markets may start factoring in the possibility of rate hikes in 2025.
Higher interest rates can hurt cryptocurrencies by lowering risk appetite, making non-yielding assets like Bitcoin less attractive, and strengthening the dollar, which pressures crypto markets.
Traders also remained sidelined as recent trade tariffs by U.S. President Donald Trump have created a broader cautious mood.
Trump-linked crypto firm WLF unveils token reserve
World Liberty Financial (WLF), a crypto company in which President Trump holds a financial stake, announced the creation of a strategic token reserve aimed at strengthening key cryptocurrencies like Bitcoin and Ethereum.
In a statement on X, WLF said the reserve would help manage market volatility, support decentralized finance projects, and build a strong capital base. The company also plans to collaborate with financial institutions to expand its tokenized asset holdings.
Trump also launched a meme-based cryptocurrency, $TRUMP, just before his inauguration.
WLF has reportedly generated substantial token sales, with Trump and his affiliates holding a significant stake in its parent company.
Goldman Sachs increased holdings in Bitcoin, Ethereum ETFs
According to filings with the SEC, Goldman Sachs significantly increased its exposure to Ethereum and Bitcoin ETFs in the fourth quarter of 2024.
The Wall Street bank’s holdings in Ether ETFs surged by 2,000%, rising from $22 million to $476 million, with most investments allocated to BlackRock’s iShares Ethereum Trust (ETHA) and Fidelity’s Ethereum Fund (FETH), along with a $6.3 million stake in Grayscale’s Ethereum Trust ETF (ETHE).
Its Bitcoin ETF portfolio also expanded by 114% to $1.52 billion. The firm’s largest holding was $1.28 billion in iShares Bitcoin Trust (IBIT), a 177% increase from Q3, alongside $288 million in Fidelity Wise (LON:WISEa) Origin Bitcoin Fund (FBTC) and $3.6 million in Grayscale Bitcoin Trust (GBTC).
Goldman Sachs also exited positions in several Bitcoin ETFs, including those from Bitwise, WisdomTree, and joint funds from Invesco-Galaxy and ARK-21Shares.
Crypto price today: altcoins also in the red after CPI data
Most altcoins were also lower, in line with Bitcoin’s movement.
World no.2 crypto Ether dropped 2.7% to $2,584.79 on Wednesday.
World no. 3 crypto XRP declined 3.1% to $2.37.
Solana lost 3.7% and Polygon dropped 3%, while Cardano fell 3.5%.
Among meme tokens, Dogecoin dipped 2.4%, while $TRUMP was 5.4% lower.
Ayushman Ojha contributed to the report.