Bitcoin, ether prices dip amid escalating macro fears of prolonged inflation

Bitcoin fell 5% to $96,527 on Wednesday afternoon in Asia after reaching above the $100,000 mark earlier this week, according to The Block’s bitcoin price page . 

Ether tumbled harder, down 8.5% over the last 24 hours to trade at $3,353. Several other major cryptocurrencies also declined, with Dogecoin and Avalanche dipping over 10% in the past 24 hours. The Block's GMCI 30 index , which measures the performance of the top 30 cryptocurrencies, dropped 7.48%.

Earlier this week, bitcoin and ether surged on the back of growing market optimism for Donald Trump’s upcoming presidential inauguration, as seen in the rise in perpetual futures funding rates, according to analysts .

However, Min Jung, an analyst of Presto Research, told The Block that broader markets, including stocks, are seen faltering amid macroeconomic concerns about sustained inflation.

“Not just crypto, but both the NASDAQ and S&P 500 fell more than 1% yesterday, driven by concerns over inflation after ISM data revealed faster-than-expected growth in the U.S. economy,” Jung said. “This heightened fears of persistent inflation, [led] to a surge in bond yields, with the 10-year Treasury reaching its highest level since April.”

Rachael Lucas, crypto analyst at BTC Markets, pointed out that the recent data from the U.S. economy led traders to anticipate that the Federal Reserve would maintain elevated interest rates for a longer period of time.

“The market was already uneasy following comments from Federal Reserve Chair Jerome Powell in December, which suggested a firm stance on monetary policy and tempered hopes for additional rate cuts, fuelling further volatility,” Lucas said. 

In his December comments, Powell stated that the fight against inflation is still ongoing. This came as incoming President Trump vowed to impose heavy tariffs, which could exacerbate inflation.

CME Group’s FedWatch Tool currently indicates a 95.2% chance that the Fed would keep the U.S. interest rate at 4.25% to 4.5% in their upcoming rate decision on Jan. 29. 

Looking ahead, Donald Trump’s upcoming inauguration on Jan. 20 is expected to cause market volatility as investors anticipate policy shifts, according to Lucas.

“With a pro-crypto majority in Congress and key appointments like Scott Bessent as Treasury Secretary and Elon Musk as an advisor, the administration signals a significant pivot towards cryptocurrency,” Lucas said.

Investors are also awaiting key economic events later this month, including the release of FOMC minutes and non-farm payroll data later this week, as well as the CPI data release on Jan. 15, which will help them gauge risks related to monetary policy and inflation.