Investment analysts are optimistic about Bitcoin after favorable U.S. inflation data led to a 3% surge in the cryptocurrency.
Bitcoin Surge on CPI Data
On January 15, the U.S. Consumer Price Index (CPI) report showed lower-than-expected core inflation in December, causing Bitcoin's spot price to rally from around $96,000 to nearly $100,000. Similar gains were seen in other assets, including stocks and gold. According to CME FedWatch, futures markets assign roughly a 30% chance of a rate cut by the Federal Reserve in March. Rate cuts typically benefit cryptocurrencies.
Expectations from New President's Policies
However, sustained price rally depends on whether U.S. President-elect Donald Trump acts decisively on his promise to implement pro-crypto policies after taking office on January 20. John Glover, Chief Investment Officer of cryptocurrency lender Ledn, told Cointelegraph that the bitcoin market has interpreted the higher potential for a rate cut as positive for digital assets and has continued to push prices higher. However, he expects prices to remain volatile until Trump makes significant moves toward relaxing regulations for crypto.
Correction and Price Outlook
Since mid-December, Bitcoin's spot price has declined roughly 10%, dropping from all-time highs of around $106,000 to around $96,000 as of January 14. The cryptocurrency's sell-off largely reflected an 'ongoing repricing driven by an unfavorable macroeconomic environment,' cryptocurrency analysts at Steno Research said. However, Bitcoin may finally be ready for a relief rally. Glassnode reported that a significant portion of froth has come out of the market, while demand remains relatively robust. Moreover, the spot price is still trading above several key support levels, suggesting the bullish market structure remains intact for now.
Analysts caution about uncertainties due to political changes in the U.S., but express confidence in Bitcoin's resilience given favorable economic conditions.
