The cryptocurrency market has seen its total market capitalization drop by more than $60 billion shortly after hotter-than-expected inflation data in the United States poured cold water on hopes the Federal Reserve would cut interest rates in March.

The core consumer price index (CPI) in the U.S., which leaves out food and energy prices, rose 0.4% from December, exceeding forecasts and marking the highest increase in eight months, government data showed. Compared to a year ago, it climbed 3.9%, unchanged from the previous month, according to Yahoo Finance.

The data has further dampened expectations of an imminent interest rate cut by the Federal Reserve. Any resurgence in inflation could even spark discussions about resuming rate hikes as policymakers have emphasized the need for broader price stability before considering reductions.

The data’s impact on the market has seen the S%P 500 index drop over 1%, while yields on 10-year Treasurys jumped 0.109% to 4.279%. Bitcoin’s price dropped over 2% after breaching the psychological $50,000 mark to now trade at $48,600, while the cryptocurrency space’s total market capitalization plunged by $60 billion to $1.78 trillion.

Crypto Market Cap Chart via Trading View

Charles Schwab’s chief fixed-income strategist Kathy Jones was quoted as saying the Federal Reserve will see the data “as another reason to wait until May or June” before potentially lowering interest rates.

While some items continued their deflationary trend, rising costs in essential areas like food, car insurance, healthcare, and housing remained a concern. Shelter costs alone contributed to over two-thirds of the overall inflation increase, the data shows.

Notably, outpatient hospital services and pet care saw record monthly price jumps. On the other hand, used car prices plunged the most since 1969 following a methodology update, while broader goods and energy prices continued to decline.

Bitcoin’s price had recently surpassed $50,000 as the spot Bitcoin exchange-traded funds (ETFs) launched in the US last month keep on attracting inflows.

Data shows that these ETFs have, since launch, brought n roughly $3 billion in net flows, even with the Grayscale Bitcoin Trust, which recently converted into a spot ETF, seeing over $6 billion of outflows.

As reported, over the past week cryptocurrency investment products attracted $1.11 billion in inflows, with Bitcoin-focused products making up 98% of total inflows at over $1 billion. Products offering exposure to Ethereum ($ETH) and Cardano ($ADA) also stood out.

Featured image via Pixabay.