- The US core CPI jumped to 3.3% in January, above expectations of 3.1%, reducing the chances of rate cuts in 2025.
- The crypto market slightly recovered following President Trump's move to begin negotiations to end the war between Russia and Ukraine.
- Top altcoins, including Ethereum, XRP and DOGE, saw slight gains alongside the S&P 500, underscoring crypto's correlation with stocks.
Bitcoin (BTC) and the crypto market saw slight gains on Wednesday after President Donald Trump's resolution calls with Russian President Vladimir Putin and Ukraine's President Volodymyr Zelenskyy. The gains mark a recovery following an earlier price decline fueled by the release of stronger-than-expected United States (US) inflation data for January, which rose 3.3% YoY against expectations of 3.1%.
Bitcoin, crypto market see gains as Trump's move to end Russian-Ukraine war sparks recovery
The US Bureau of Labor Statistics (BLS) announced that the Consumer Price Index (CPI) rose 0.5% in January, outpacing forecasts of 0.3% and December's 0.4% increase.
On an annual basis, CPI climbed 3.0%, exceeding projections of 2.9%. Core CPI, which excludes food and energy prices, jumped to 3.3% YoY, surpassing forecasts of 3.1% and rising from December's 3.2%.
The higher-than-expected inflation data has seen market participants pricing only one rate cut in 2025, followed by a Federal Reserve pause until 2026.
As a result, the crypto market saw a brief decline, considering that risk assets like Bitcoin and other top cryptocurrencies perform better in a low interest rate environment.
The rising inflation and potential absence of rate cuts in the year could hamper investors' positive crypto market outlook for 2025.
However, if President Trump continues pushing for policies that support the crypto landscape, it could boost positive investor sentiment and trigger a rally despite the possibility of one or zero rate cuts in 2025.
Barely a month in office, President Trump has held on to a major part of his promises to the crypto industry by signing executive orders that could help create a good regulatory environment for digital assets.
The President has now shifted attention to foreign borders, making moves to settle the war between Russia and Ukraine.
Trump revealed in a post on his social media platform Truth Social that he got on a call with Putin and Zelenskyy to discuss the possibility of ending the Russia-Ukraine war.
The crypto market reacted positively to the news from President Trump, with Bitcoin and top altcoins experiencing gains.
The war was partially responsible for triggering the crypto bear market in 2022. However, with the war potentially ending, Bitcoin and crypto could see a full recovery from the recent market drawdown on February 3.
In the past 24 hours, Bitcoin rose above $97,000, nearing the $100,000 psychological level. The S&P 500 also slightly recovered following previous declines earlier in the day.
This trend highlights Bitcoin's growing correlation with the stock market, which was evident throughout 2024.
The altcoin market also witnessed a boost, with XRP, BNB, Cardano and Dogecoin seeing gains of 2%, 9%, 3% and 5%, respectively.
Other key sectors also saw notable gains, with the Artificial Intelligence (AI) tokens sector leading the way.
Near Protocol (NEAR) and Internet Computer (ICP) rose by 6% and 5%, respectively.
Bitcoin, altcoins, stablecoins FAQs
Bitcoin is the largest cryptocurrency by market capitalization, a virtual currency designed to serve as money. This form of payment cannot be controlled by any one person, group, or entity, which eliminates the need for third-party participation during financial transactions.
Altcoins are any cryptocurrency apart from Bitcoin, but some also regard Ethereum as a non-altcoin because it is from these two cryptocurrencies that forking happens. If this is true, then Litecoin is the first altcoin, forked from the Bitcoin protocol and, therefore, an “improved” version of it.
Stablecoins are cryptocurrencies designed to have a stable price, with their value backed by a reserve of the asset it represents. To achieve this, the value of any one stablecoin is pegged to a commodity or financial instrument, such as the US Dollar (USD), with its supply regulated by an algorithm or demand. The main goal of stablecoins is to provide an on/off-ramp for investors willing to trade and invest in cryptocurrencies. Stablecoins also allow investors to store value since cryptocurrencies, in general, are subject to volatility.
Bitcoin dominance is the ratio of Bitcoin's market capitalization to the total market capitalization of all cryptocurrencies combined. It provides a clear picture of Bitcoin’s interest among investors. A high BTC dominance typically happens before and during a bull run, in which investors resort to investing in relatively stable and high market capitalization cryptocurrency like Bitcoin. A drop in BTC dominance usually means that investors are moving their capital and/or profits to altcoins in a quest for higher returns, which usually triggers an explosion of altcoin rallies.
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