Bitcoin (BTC) Price Dip Continues as Hawkish Powell, Inflation Data Spook Market

Bitcoin (BTC) took a price dip, following a series of hawkish comments from Federal Reserve Chair Jerome Powell and a surprising spike in U.S. inflation.

Bitcoin (BTC) price took a hit on Friday, following a series of hawkish comments from Federal Reserve Chair Jerome Powell and a surprising spike in U.S. inflation.

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The hawkish rhetoric from the Federal Reserve led to major outflows from digital asset investment products. James Butterfill of CoinShares shared that this was the first big outflow after a 19-week streak of inflows totaling $29.4 billion. Bitcoin, which is sensitive to interest rate changes, was hit hardest, seeing outflows of $430 million.

Inflation Data Adds Pressure

During a recent Congressional hearing, Powell suggested that rate cuts might take longer than previously expected, hinting that interest rates could stay elevated for an extended period. At the same time, the latest U.S. inflation data caught many off guard. The Consumer Price Index (CPI) for January showed a 3% increase, compared to 2.9% in December, with prices jumping by 0.5% in January alone, up from a 0.4% rise in the previous month.

Data points to a clear upward trend in inflation, with annualized inflation rates for the past three and six months showing a re-acceleration since the Fed began discussing rate cuts.

This creates a risk that the Federal Reserve will turn more hawkish on inflation, which could hurt BTC price.

Headline CPI inflation in the US is on a clear upward trend.

The annualized inflation rates for both the last 3 and 6 months show inflation has been re-accelerating since the Federal Reserve started discussing rate cuts.

This creates a risk that the Fed will turn more hawkish… pic.twitter.com/5F6bA8z5M7

Bear Market Fears Return as Bitcoin Sell-Off Intensifies

With higher inflation and a slower approach to rate cuts, there’s a growing fear that the market may be entering a bear market.

As a result, many digital asset investment products have seen outflows, and the pressure on Bitcoin and other cryptocurrencies continues to build.

Bitcoin in Consolidation: Bottom In or More Dip Ahead?

Bitcoin is currently in a consolidation phase, and while it’s moving within a range, the key focus is whether the correction has already bottomed or if the price will extend further. Some analysts believe that a larger corrective wave could still form, which could potentially push Bitcoin’s price lower toward $82,000.

Altcoins are also facing difficulties, with no major breakouts to report. The market remains in a state of flux, and the next big move will depend on how Bitcoin handles its current correction.

The information presented in this article is for informational and educational purposes only. It does not constitute financial advice or an offer to buy or sell any cryptocurrency.