With Bitcoin‘s BTC/USD price struggling and U.S. inflation data exceeding expectations, market analysts recommend that crypto investors holding long positions prioritize downside protection and closely monitor institutional flows.

After hotter-than-expected inflation data was released, Bitcoin experienced a 2% decline to levels below $95,000, highlighting the ongoing volatility and uncertainty within the cryptocurrency market.

Ethereum ETH/USD mirrored this trend, also decreasing about 2%, while other major altcoins, including Solana SOL/USD, XRP XRP/USD and Dogecoin DOGE/USD, experienced declines between 2% and 3.5%.

The Consumer Price Index (CPI) data revealed a higher-than-anticipated rise in inflation, dampening expectations for imminent Federal Reserve interest rate cuts.

The CPI rose to 3% year-over-year in January, exceeding economists’ forecasts.

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Why It Matters: A report by QCP Capital suggests that crypto investors holding long positions should exercise caution.

The report emphasizes that “for participants still holding long positions in crypto, following institutional flows and purchasing downside protection may be the best strategy,” particularly as put options remain relatively inexpensive.

The QCP report notes Bitcoin has been underperforming traditional equities and gold.

The surge in inflation has led to a rally in the U.S. dollar index and a rise in Treasury yields, putting pressure on risk assets like cryptocurrencies and gold.

Gold itself tumbled by 1% after the data was released.

Adding perspective, Chuck Zhang, CFO of PolyFlow told Benzinga that the next few months will be pivotal for the crypto market as the Trump administration clarifies its stance on the industry.

While the initial reaction to Trump’s crypto executive order may have been muted, Zhang remains optimistic about the potential for future bullish momentum.

“President Trump's openness to a US crypto reserve is a game-changer and could fuel bullish momentum in the near term while demonstrating that the US is serious about dominating the crypto space,” he said.

He added that potential Solana and XRP ETF approvals and a U.S. strategic Bitcoin reserve could spur new levels of institutional adoption.

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