Bitcoin Price Takes a Hit as Investment Products See $430 Million Outflow After Fed’s ‘Hawkish’ Comments

• Bitcoin suffers $430M in outflows after hawkish Fed and inflation concerns
• Fed Chair Jerome Powell hints at slower rate cuts, increasing market uncertainty
• U.S. CPI data for January shows 3% inflation, higher than expected

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. 

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, surpassing the 2.9% level of December, with prices jumping by 0.5% in January alone—higher than the previous month’s 0.4% rise.

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 has created a risk that the Federal Reserve may become more hawkish in its approach to inflation, which could negatively impact Bitcoin’s price.

Related: Altcoin Crash Deepens, But Analyst Says Crypto Market Set to Rebound Soon

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. 

Related: Analyst: $1.25T is a Crucial Resistance for Crypto MarketCap

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.