Bitcoin briefly touches the $100,000 mark on cooling inflation
Bitcoin has extended its rebound on Wednesday, briefly reaching the $100,000 mark on the back of encouraging inflation report fueling investor’s risk appetite.
The cryptocurrency experienced a 7 percent gain over two days, according to Coin Metrics. Bitcoin was last higher by more than 3 percent at $99,493.26, reflecting broader market optimism, driven largely by recent inflation reports.
December CPI and PPI
On Wednesday, the December consumer price index (CPI) report showed that core inflation had unexpectedly slowed. Monthly inflation was 0.4 percent with an annual rate of 2.9 percent, which matched the expectations of the market. Core inflation was 3.2 percent, better-than-expected.
The positive producer price index (PPI) also boosted confidence, indicating that wholesale prices increased at a slower rate than expected.
Fyqieh Fachrur, a trader at Tokocrypto, commented, “Anticipated interest rate cuts have provided a breath of fresh air for crypto assets. With inflation under control, investors see Bitcoin as a promising hedge amidst global economic uncertainties (translated from Indonesian).”
In late 2024, when the post-election crypto rally fizzled following warnings from Federal Reserve Chair Jerome Powell about persistent inflation, which had spooked many investors. Additionally, as bond yields surged, growth-oriented risk assets like Bitcoin were hit hard, causing a brief dip below $90,000 earlier this week.
However, in the recent weeks, Bitcoin’s price movements have been taking its cue from the broader equities market, particularly due to the rise of Bitcoin ETFs, which has led to the institutionalisation of the crypto.
Apart from this, Bitcoin’s correlation with the S&P 500 has been on the rise. This contrasts to Bitcoin’s correlation with gold dropping sharply since the end of December.
Projected upward trajectory of Bitcoin
According to analyst projections, Bitcoin could continue its upward trajectory and soon reach $103,000 in the near term. Fyqieh expects the cryptocurrency to hit $101,000 to $102,000 in the coming weeks on the back of strong economic data and president-elect Donald Trump’s inauguration on 20 January.
Pro-crypto policies from the Trump administration and the US Securities and Exchange Commission’s plan to revamp crypto policies is a push that Bitcoin is riding on. This could be the stage for a more crypto-friendly regulatory framework in the US.
“Bitcoin appears poised to continue its positive trend in early 2025. If this momentum persists, the next target of $103,000 is within reach. However, investors should remain mindful of market risks to optimise opportunities amid high volatility,” Fyqieh noted.
Not only the flagship cryptocurrency, but Ether and Solana also showed a strong performance, rising past $3,400 and exceeding the $200 mark, respectively. This reflected renewed momentum across the crypto market.
However, analysts have warned investors to remain cautious about global market dynamics and Bitcoin’s volatile nature, which often require well-planned strategies.
