Tuesday saw a drop in Bitcoin (BTC) below $49,000 as expectations for interest rate cuts were dampened by a hotter-than-expected U.S. inflation estimate.The largest cryptocurrency by market capitalization shed 2.4%, while the CoinDesk 20 (CD20) broad-market crypto index fell by almost 2% to $48,700 from just over $50,000 earlier in the day.
The decline occurred after the Consumer Price Index (CPI) report for January revealed 3.1% annual inflation, which was higher than the 2.9% projection made by analysts.According to the CME FedWatch Tool, market participants now anticipate only a 34% possibility of the Federal Reserve reducing interest rates in May, down from 52% a day earlier.
For traditional markets, there was also less likelihood of an impending rate cut. The tech-heavy Nasdaq Composite Index and the S&P 500 equities index both saw declines of up to 2%, but the yield on 10-year U.S. Treasury bonds increased by 12 basis points.