Bitcoin's price dropped along with Ethereum after the US reported that inflation rose to 3% for the 12 months ending in January, exceeding economists' expectations of a 2.9% increase. The Consumer Price Index (CPI) indicated that inflation accelerated after being at 2.4% in September. The price of Bitcoin fell significantly, declining 2.3% in just 15 minutes following the CPI announcement. This increase in inflation led to concerns regarding the Federal Reserve's monetary policy and the distant possibility of rate cuts, as traders began to doubt significant rate reductions in 2025. Fed Chair Jerome Powell was also questioned about the implications of economic policies during his congressional testimony. The prevailing thought among market participants is that risk assets like cryptocurrencies may stall in a higher interest rate environment, which could dampen their appeal for investors.

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