Bitcoin extended declines on Wednesday, as traders remained cautious ahead of a key U.S. inflation report, while the Federal Reserve Chair's comments slashing near-term interest rate-cut expectations, further eroded market confidence.
The world’s largest cryptocurrency fell 2.6% to $95,911.5 by 02:11 ET (07:11 GMT).
Traders reduce positions ahead of key US data, Powell comments weigh
Market participants reduced their positions, while cautiously awaiting the January Consumer Price Index (CPI) report, scheduled for release later in the day.
Analysts anticipate a 2.9% year-over-year increase in inflation. A higher-than-expected reading may further negatively impact speculative assets like cryptocurrencies.
In his recent testimony before the Senate Banking Committee, Fed Chair Jerome Powell emphasized the strength of the U.S. economy, citing low unemployment rates and inflation levels above the Fed's 2% target.
He indicated that there was no immediate urgency to reduce short-term interest rates, suggesting a cautious approach to monetary policy.
Higher interest rates can hurt cryptocurrencies by lowering risk appetite, making non-yielding assets like Bitcoin less attractive, and strengthening the dollar, which pressures crypto markets.
The combination of anticipated inflation data and Powell's remarks has contributed to a risk-averse sentiment among traders.
Traders also remained sidelined as recent trade tariffs by U.S. President Donald Trump have created a broader cautious mood.
Trump-linked crypto firm WLF unveils token reserve
World Liberty Financial (WLF), a crypto company in which President Trump holds a financial stake, announced the creation of a strategic token reserve aimed at strengthening key cryptocurrencies like Bitcoin and Ethereum.
In a statement on X, WLF said the reserve would help manage market volatility, support decentralized finance projects, and build a strong capital base. The company also plans to collaborate with financial institutions to expand its tokenized asset holdings.
Trump also launched a meme-based cryptocurrency, $TRUMP, just before his inauguration.
WLF has reportedly generated substantial token sales, with Trump and his affiliates holding a significant stake in its parent company.
Crypto price today: altcoins fall amid broader weakness
Most altcoins were also lower, in line with Bitcoin’s movement.
World no.2 crypto Ether fell 4.6% to $2,604.58 on Wednesday.
World no. 3 crypto XRP declined 4% to $2.4007.
Solana slipped 5.4% and Polygon dropped 6.7%, while Cardano fell 4.5%.
Among meme tokens, Dogecoin lost 6.3%, while $TRUMP was 8.5% lower.
