Bitcoin’s early recovery halted at $98K and fell to $95K due to macroeconomic events.
Impact of Powell’s Outlook on Bitcoin
Bitcoin’s early week recovery to $98K fell to $95K after Jerome Powell’s semi-annual address to the US Congress. Powell, the Chair of the Federal Reserve, showed a cautious approach towards interest rate cuts, stating there’s no rush to change policy. Typically, lower rates encourage investment in assets like Bitcoin and stocks. However, Powell’s cautious stance, along with Trump’s tariffs and a slow Fed rate cut outlook, increased bearish sentiment.
January CPI Report and Bitcoin
Fed rate cuts are tied to US labor markets and inflation, thus focus shifts to the January CPI report. A CPI above the forecasted 0.3% could encourage the Fed to maintain current rates longer, a bearish sign for the market. Despite this, traders estimate a 95% chance of a rate pause in the next Fed meeting mid-March.
Volatility and Bitcoin’s Future
The Coinbase Premium Index, tracking US investors' Bitcoin demand, remains muted amid uncertainty. After early February gains, the index returned to neutral, and Bitcoin retraced from $101K to $95K. A further dip in the index may limit Bitcoin’s near-term rebound despite the expected supply shock. According to Coinglass data, Bitcoin’s market could stay volatile, fluctuating between $94K and $100K in the short term.
Macroeconomic uncertainty continues to pressure Bitcoin, limiting its near-term recovery potential. Future CPI data and Fed decisions will be crucial for Bitcoin's trajectory.
