Bitcoin falls under $50,000 following hotter-than-expected inflation data

Cryptocurrencies fell Tuesday amid a broader market sell-off following a hotter-than-expected CPI reading.
Bitcoin was last lower by 0.8% at $49,658.57 according to Coin Metrics. Earlier, it sunk as low as $48,372.89. On Monday it punched through the $50,000 mark to its highest level in more than two years.

Tuesday's down move began when the U.S. Bureau of Labor Statistics reported a bigger increase in the January consumer price indexthan economists surveyed by Dow Jones anticipated. That report sent yields higher, with the benchmark 10-year U.S. Treasury yieldrising more than 10 basis points, and pressured risk assets.
"Bitcoin is an aspirational store of value ... and therefore its price is in part influenced by monetary policy," said Jurrien Timmer, Fidelity Investments' director of global macro. "The CPI report came in hot and suggests that the Fed is further away from a pivot than was priced in. That suggests higher nominal and real rates for longer, which in theory diminishes the urgency to hold a store of value."
Nico Cordeiro, chief investment officer at Strix Leviathan, said he expects the crypto rally to continue despite Tuesday's pause.
"However," he added, "investors should expect longer term weakness if inflation continues to run hotter than expected, which tends to run counter to the dominant belief that bitcoin is an inflation hedge — it is not, it's a gauge on liquidity within the financial system."