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Breaking News: Trump Prepares To Allow Crypto Investments In $9 Trillion Retirement Market
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Breaking News: Trump Prepares To Allow Crypto Investments In $9 Trillion Retirement Market

Bitcoin Faces CPI Shock—But Research Firm Says ‘Buy The News’

Jake Simmons
Jake Simmons
5 months ago
3 mins read
Bitcoin news CPI

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Bitcoin and the broader crypto markets faced a jolt on January 12 after the latest US Consumer Price Index (CPI) data came in hotter than expected. The shock sent Bitcoin briefly downward before bouncing back, spurring a range of reactions among traders and analysts.

The US Bureau of Labor Statistics released figures showing a 0.5% month-over-month rise in CPI, placing annual inflation at 3.0%—above the previously anticipated 2.9%. Meanwhile, Core CPI (excluding volatile food and energy costs) grew by 0.4% month-over-month, settling at a 3.3% annual rate and similarly surpassing consensus forecasts.

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Shortly before the data went live, Bitcoin saw a quick drop of -2.1% to $94,250, which some market observers speculate might be tied to traders or insiders receiving an early hint of the inflation overshoot. However, the downturn proved temporary; prices rebounded to highs of $98,100 as worried retail traders watched the market reaction unfold.

A ‘Buy The News’ Event For Bitcoin?

Santiment, an on-chain analysis firm, weighed in on the volatility in a blog post dated February 13. In an update titled “CPI Catching the Crowd’s Eye…”, Brian Quinlivan, Director of Marketing at Santiment, noted that market participants have become acutely sensitive to any inflation news, especially given the turmoil of the last few years.

Citing a 15-month high in CPI-related discussions across social channels like X, Reddit, Telegram, 4Chan, Bitcointalk, and Farcaster, Santiment highlighted the magnitude of traders’ apprehension: “Initially, just before the CPI Report was announced, Bitcoin briefly dropping -2.1% to $94,250 before recovering slightly. This very well could have been some large insiders that were getting wind of the high inflation news ahead of time. However, prices quickly recovered to as high as $98,100 as retails were showing concern.”

The post further explained that the shock of this CPI release has reignited fears linked to Federal Reserve policy changes. After cutting rates throughout 2023 and 2024, the Fed abruptly halted further cuts in November 2024.

Santiment warns this might signal a prolonged period without additional rate reductions: “Now that inflation numbers are concernedly high in the US, many are predicting that it will be quite a long time before we see further cuts, which traditionally benefit the markets. The rate rises in 2022, which were largely attributed to the massive crypto correction, are still fresh in peoples’ memories.”

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Despite the prospect of extended monetary tightening, Santiment observed a potential contrarian signal involving Bitcoin holder counts: “We have already been seeing a decline in total holders on the Bitcoin network, and this is generally a bullish signal. An ideal scenario would be for small traders to overreact to this news, allowing whales and sharks to scoop up more coins and send prices skyrocketing. Based on the early price rebounds following the news, this may be shaping up to be a ‘sell the rumor, buy the news’ scenario.”

Market watchers beyond Santiment have also chimed in. Tom Dunleavy, Partner at MV Global, also offered an optimistic take on the data, specifically noting the role of shelter costs: “The key driver of this hot CPI print was housing (1/3 of headline and 40% of core inflation). This reading is massively lagged by almost a year. Nothing to worry about as more real time readings show housing flat to falling in major markets,” he remarked via X.

For many traders, the burning question remains: Will this “hot” CPI reading mark the start of a new inflationary trend—or is it simply a quirk of delayed data? Santiment’s suggestion of a possible “sell the rumor, buy the news” dynamic reflects how swiftly sentiment can shift in a crypto market often driven by momentum and social consensus. Meanwhile, Dunleavy’s housing-focused breakdown underscores that headline inflation numbers can be deceptive without dissecting the underlying components.

At press time, BTC traded at $96,028.

Bitcoin price
BTC remains in its range, 1-week chart | Source: BTCUSDT on Tradingview.com
Featured image created with DALL.E, chart from TradingView.com
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Jake Simmons
Jake Simmons

Jake Simmons

Jake Simmons, a dedicated crypto journalist, has been passionate about Bitcoin since 2016 when he first learned about it. Through his extensive work with NewsBTC.com and Bitcoinist.com, Jake has become a trusted voice in the crypto community, guiding newcomers and seasoned enthusiasts alike towards a deeper understanding of this dynamic field.

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His mission is simple yet profound: to demystify Bitcoin and cryptocurrencies and make them accessible to everyone.
With a professional career in the Bitcoin and crypto scene that began right after graduating with a degree in Information Systems in 2017, Jake has immersed himself in the industry. Jake joined the NewsBTC Group in late 2022. His educational background provides him with the technical prowess and analytical skills necessary to dissect complex topics and present them in an understandable format. Whether you are a casual reader curious about Bitcoin or an investor seeking to navigate the latest market trends, Jake’s insights offer valuable perspectives that bridge the gap between complex technology and everyday usage.

Jake is not just a reporter on technological trends; he is a firm believer in the transformative potential of Bitcoin over traditional fiat currencies. To him, the current financial system is on the brink of chaos, propelled by unchecked government actions and flawed Keynesian economic policies. Drawing from the principles of the Austrian school of economics, Jake views Bitcoin not merely as a digital asset but as a crucial step towards rectifying a failing monetary system. His libertarian views reinforce his stance that just as the church was separated from the state, so too should money be freed from governmental control.

For Jake, Bitcoin represents more than just an investment; it's a peaceful revolution. He envisions a future where Bitcoin fosters a sustainable and responsible financial framework for generations to come. His advocacy is not about opposition but about evolution, about laying the groundwork for a system that prioritizes transparency and equity over secrecy and inequality.

As a journalist, Jake’s articles are crafted with the precision of a scholar and the passion of a true believer. He provides not only news but also thoughtful analysis that connects the dots between daily developments and larger economic theories. His work is a beacon for those lost in the technical jargon often associated with crypto discussions, illuminating the practical implications and benefits of these technologies.

In summary, Jake Simmons is not just reporting on a revolution; he wants to be part of it, fully committed to enhancing public understanding and adoption of Bitcoin and cryptocurrencies. His work is more than just a collection of articles; it’s a resource, a guide, and a companion for anyone ready to explore the potential of this digital frontier. Whether you are taking your first steps into crypto or are a veteran looking to stay on top of the latest trends, Jake’s insights provide clarity and foresight in an often unpredictable industry. Join him on this journey to reshape the world of finance, one post at a time.

You can engage with his latest takes on Twitter: @realJakeSimmons.

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Disclaimer: The information found on NewsBTC is for educational purposes only. It does not represent the opinions of NewsBTC on whether to buy, sell or hold any investments and naturally investing carries risks. You are advised to conduct your own research before making any investment decisions. Use information provided on this website entirely at your own risk.

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Reason to trust

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Created by industry experts and meticulously reviewed
The highest standards in reporting and publishing
How Our News is Made

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