Key Takeaways
- Bitcoin briefly fell below $95,000 following hotter-than-expected inflation data.
- Sticky inflation followed by higher-for-longer rates would make Treasuries more attractive to investors than bitcoin.
- Bitcoin tends to move in tandem with risk-on assets in relation to inflation data releases, despite being touted as a risk-off asset.
- Despite recent bitcoin price troubles, inflows into spot bitcoin ETFs have been positive every week this year.
Hotter-than-anticipated inflation data saw bitcoin (BTCUSD) briefly dip below $95,000 as investors’ hopes of a rate cut by the Federal Reserve at its March meeting dimmed further.
The largest cryptocurrency by market cap recovered, trading close to $96,000 early afternoon Wednesday. Bitcoin-related stocks including Strategy (MSTR), Coinbase (COIN), Marathon Holdings (MARA) also mirrored that pattern.
However, the latest inflation print, along with uncertainty around tariffs that may further stoke inflation doesn’t bode well for bitcoin as an investment. Higher rates imply greater yields on Treasuries, making them more attractive compared to assets such as bitcoin from both a return and riskiness perspective.
What’s Going On With Bitcoin?
Bitcoin surged to a new all-time high above $109,000 less than a month ago on January 20th, just prior to the inauguration of U.S. President Trump. Trump was expected to usher in a more friendly regulatory environment as a whole and has already issued multiple executive orders related to digital assets. But that optimism hasn’t translated into gains for investors as bitcoin price has since remained volatile.
Some market watchers, including BlackRock’s head of digital assets, have proposed considering bitcoin as a risk-off asset, that like gold performs well in times of uncertainty, as opposed to risk-on assets such as stocks and high-yield bonds that gain in times of upbeat market sentiment.
However, that thesis has come under question in recent months as the cryptocurrency oftentimes moves in tandem with risk-on assets such as traditional stocks, which also fell following today’s inflation report.
Despite the recent price decline, inflows for the spot bitcoin exchange-traded funds (ETFs) have been positive every week so far in 2025, according to Farside Investors. That said, spot bitcoin ETFs have seen a combined $243 million in outflows so far this week.