Bitcoin has experienced a notable decline as the US stock market opened on Friday, prompted by higher-than-expected inflation data. The most recent figures from the Producer Price Index (PPI) revealed an increase of 0.5% month-on-month for January, exceeding the anticipated 0.3%. The core PPI presented an even larger surprise, rising 0.8% against expectations of 0.3%. This growth in producer prices has led to increased concerns in risk assets, negatively impacting Bitcoin’s value.
As a result, Bitcoin’s price fell nearly 2.5% on exchanges like Bitstamp, intensifying pressure on the cryptocurrency market as traders reacted to the heightened inflationary environment. In contrast, traditional safe havens such as gold and silver thrived under this “risk-off” sentiment. Gold turned its sights on $5,200 per ounce, while silver surged past $92, both reaching their highest levels since late January.
The market’s reaction to the inflation data has prompted a reassessment of expectations regarding interest rate decisions by the Federal Reserve. Projections for cuts in interest rates during the Fed’s March meeting have now dropped to below 4%.
With the end of the month approaching, Bitcoin traders find themselves anxious about potential outcomes. Analyst Michaël van de Poppe has cautioned about the possibility of Bitcoin encountering levels reminiscent of its significant downturn in early February, where it reached 15-month lows close to $59,000. He emphasized the importance of holding the $65,000 mark, stating, “Pretty crucial area for me to hold on to. I’d highly favor that $BTC finds a higher low at $65k.”
Historical comparisons have not been favorable; last month witnessed a substantial collapse in the markets, raising uncertainties for traders as they await the closing days of January. Analysts are closely monitoring key resistance levels, including the 200-week exponential moving average and the crucial old all-time highs near $69,000.
Currently, Bitcoin’s performance is on track with February 2025 metrics, showing losses of nearly 17% month-to-date. This situation marks a concerning trend as the cryptocurrency prepares for what would be its fifth consecutive month of losses—a pattern not seen since 2018, according to data from CoinGlass.
