Bitcoin approached the highly awaited $100,000 mark yet again, as softened US inflation figures rekindled investor appetite for riskier assets such as equities and cryptocurrencies. The flag bearer cryptocurrency was trading in the range of $90,000 to $100,000 during the last month, climbing 3.5% during the day before touching $99,776, before easing somewhat. Bitcoin last managed to cross $100,000 on January 7.
It marked its closest correlation to US tech stocks in two years, while gains mirrored those posted by Bitcoin and other digital assets as the Nasdaq 100 Index soared in the wake of the inflation report. The data by Bloomberg had a 30-day correlation coefficient of 0.70 showing how synchronized movements there have been between the largest cryptocurrency and the equity gauge.
Bitcoin Jumps Massively, Is US Inflation Rate to be Questioned?
Smaller inflation print helps build some appetite for risk. US inflation data came in at 2.9% year over year, which is in line with expectations. Core inflation, month over month, was only up 0.2%, missing expectations. This surprise softness somewhat eased concerns over the Federal Reserve’s ability to delay further interest rate cuts and set off equities and crypto rallies. Both the S&P 500 and Nasdaq 100 were up more than 1% as of the time of writing after the report.
Policy Uncertainty Before Trump’s Inauguration
President-elect Donald Trump is set to take office on January 20, which has already added fuel to the market speculation rumors. Entrepreneurs are waiting for his promise of making the US the world’s hub for crypto against inflation risks of the US tariffs and immigration policies.
Analysts at K33 Research noted that the market’s heightened sensitivity to interest rates over the past month makes inflation data pivotal. They also anticipate that “Trump momentum” could influence market behavior leading up to the inauguration.
Meanwhile, hedging activity in the options market is rising, signaling growing caution. According to Derive.XYZ’s Sean Dawson, an uptick in bearish bets reflects investor positioning for potential volatility as the inauguration approaches.
Bitcoin remains the focus of financial markets, as the potential break of $100,000 may be a signal of a general change in the risk appetite influenced by changing economic and political conditions.
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