Bitcoin’s Market Dynamics Amidst US Inflation Data Release
by Vivian Nguyen | Feb. 12, 2025
Understanding the Coinbase Premium Index Shift
As the United States prepares for the release of january’s Consumer Price Index (CPI), the Coinbase premium index has taken a turn for the worse, signaling increased selling pressure among US investors. According to Coinglass, this negative shift mirrors the market’s anxiety over potential inflationary trends. The last time the index dipped into negative territory was on February 3, coinciding with Bitcoin’s price hitting a low of $92,000 after President Trump’s declaration of tariffs on imports from Canada, Mexico, and China, which heightened inflation concerns.
The Coinbase premium index monitors the price difference between Bitcoin’s dollar-denominated value on Coinbase and its tether-denominated value on Binance. A negative reading suggests that Bitcoin is trading at a higher price on Binance compared to Coinbase, reflecting a sell-off by US retail investors who frequently use Coinbase as their preferred crypto trading platform.
Bitcoin’s Price Fluctuations and ETF Performance
Bitcoin experienced a brief dip below $95,000 on Tuesday afternoon but managed to recover. Throughout the night, the price oscillated between $95,000 and $96,000. As of the latest update, Bitcoin was trading around $95,800, marking a 2% decline over the past 24 hours, as reported by CoinGecko.
Offshore traders played a critically important role in the price recovery, pushing Bitcoin from overnight lows near $94,900 to $96,000.This trend aligns with the outflows from US spot Bitcoin ETFs, which have seen two consecutive days of net withdrawals, as per Farside Investors’ data. Over the first two trading days of the week, approximately $243 million was withdrawn from these funds. However,BlackRock’s IBIT fund has bucked this trend,attracting around $59 million in inflows this week.
Inflation Data and its Impact on the Market
Economists predict that January’s CPI will reveal a headline inflation rate of 2.9%, consistent with December’s annual increase. The core inflation rate, excluding food and energy prices, is expected to rise by 3.1% year-over-year, potentially marking the lowest level since April 2021.
The Federal Reserve maintained the fed funds rate at 4.25%-4.5% during its January 2025 meeting, following three consecutive rate cuts in 2024. Fed Chair Powell has indicated that the central bank is not in a rush to lower interest rates and will pause to observe further progress on inflation. The Fed’s long-term goals include achieving maximum employment and maintaining an inflation rate of 2%.