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crypto.news 2025-02-12 14:23:34

Here’s why Litecoin, Shiba Inu, Solana, Bitcoin prices just tumbled

Bitcoin and other altcoin prices traded lower on Wednesday after the U.S. released hotter-than-expected consumer inflation data. Bitcoin ( BTC ) fell by 3%, while other popular altcoins saw steeper declines. Litecoin ( LTC ) was one of the worst-performing coins, dropping over 11% in the past 24 hours. Shiba Inu ( SHIB ) and Solana ( SOL ) fell by more than 5%, while the total market cap of all cryptocurrencies declined by 3% to $3.11 trillion. US inflation soared in January The main catalyst for the sell-off was a report showing that U.S. inflation surged in January, a trend that may continue this month. The headline Consumer Price Index rose from 0.4% in December to 0.5% in January, exceeding the median estimate of 0.5%. This increase translated to an annual rise of 3.0%, the highest level in several months. Core consumer inflation climbed from 0.2% to 0.4% on a monthly basis and from 3.2% to 3.3% annually. These numbers pushed U.S. stock futures lower, with the Dow Jones and Nasdaq 100 indices dropping more than 400 points. U.S. bond yields surged, with the 10-year and 30-year yields rising to 4.63% and 4.82%, respectively. The market reaction was primarily driven by expectations of higher interest rates for longer. In a statement on Tuesday, Federal Reserve Chair Jerome Powell reiterated that the Fed was in no rush to cut rates, citing persistently high inflation. Fed official Beth Hammack echoed a similar stance, stating that future rate decisions should depend on inflation declining further. She said : “As long as the labor market remains healthy, I am looking for broad-based evidence that inflation is sustainably returning to 2% before adjusting policy further.” You might also like: Red alert for Bitcoin price as 30-year Treasury yield forms risky pattern Inflation impact on Bitcoin, Shiba Inu, Solana, and other altcoins Higher inflation affects Bitcoin and other altcoins like Solana and Shiba Inu due to its impact on interest rates and bond markets. The Fed has a dual mandate of maintaining low inflation and a stable labor market. It typically cuts rates when inflation falls to stimulate consumption. However, with CPI moving further from the 2% target, the likelihood of additional rate cuts has diminished. In its last meeting, the central bank projected two rate cuts this year. The red-hot CPI print means that the Fed may not cut rates this year. Mohammed El-Erian has hinted that the Fed may hike rates since Trump’s tariffs will worsen the situation. The four main takeaways on the higher-than-expected inflation data for the US (0.5% for headline and 0.4% for core): Inflation is hotter than the Federal Reserve expected based on its signals, and is getting hotter; The latest numbers are consistent with other data points;… https://t.co/0HkIxsYxvc — Mohamed A. El-Erian (@elerianm) February 12, 2025 Bitcoin and altcoins tend to decline when the Fed raises rates, as seen in 2022. Conversely, they often rebound when the Fed signals a shift toward rate cuts, as happened in early 2024. You might also like: 3 reasons why the Jasmy price may jump 165%

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