Bitcoin and the broader cryptocurrency market experienced a decline as US inflation surpassed expectations, with the annual Consumer Price Index (CPI) reporting at 3% for January 2025, slightly above forecasts. The unexpected inflation data triggered concerns about macroeconomic pressures impacting digital assets, causing Bitcoin to dip below $95,000 shortly after the announcement. This rise in inflation represents the largest monthly increase in a year, with a 0.5% monthly gain exceeding Dow Jones forecasts. President Trump, advocating for lower interest rates, suggested that such measures would help mitigate economic pressures, despite Federal Reserve Chairman Jerome Powell stating that there was no need to rush rate cuts given a strong economy. Analysts noted that seasonal price increases in January contributed to the inflation spike, with further Fed decisions likely hinging on upcoming unemployment figures and preferred inflation measures. Overall, this inflation backdrop represents a challenging environment for risky assets like cryptocurrencies, which have historically responded to interest rate cuts favorably.

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