Cryptocurrency analysts are expressing renewed optimism after the latest U.S. inflation report fueled a 3% jump in Bitcoin’s price, sparking hopes of imminent interest rate reductions.
On January 15, the U.S. Consumer Price Index (CPI) revealed lower-than-anticipated core inflation for December. This prompted Bitcoin’s value to rise from approximately $96,000 to nearly $100,000. Traditional markets, including equities and gold, also experienced gains.
According to CME FedWatch data, futures markets now suggest a 30% probability of the Federal Reserve lowering interest rates in March. Such rate cuts are generally viewed as favorable for cryptocurrencies.
“Bitcoin behaves like a store of value similar to gold, so a cooling inflation trend is likely to support its prices,” said Bryan Armour, Director of Passive Strategies Research at Morningstar.
Data from the CME shows Bitcoin futures for February through April have climbed 2%–3% as of January 15, indicating a potentially brighter short-term outlook for the leading cryptocurrency.
Uncertainty Around Policy and Market Trends
However, the sustainability of Bitcoin’s rally hinges on forthcoming actions from U.S. President-elect Donald Trump, who will take office on January 20. Analysts believe his commitment to crypto-friendly policies could be a game changer for the industry.
“The market has interpreted the increased likelihood of a rate cut as a positive signal for digital assets, pushing Bitcoin prices higher,” said John Glover, Chief Investment Officer at cryptocurrency lender Ledn.
Still, Glover warned of potential volatility ahead, stating, “Prices may remain unpredictable until there’s concrete movement on Trump’s promises to ease crypto regulations.”
Following his victory in the November 2024 elections, Trump pledged to appoint leaders supportive of the crypto sector to key regulatory roles and make the U.S. a global hub for cryptocurrency innovation.
Price Correction and Market Sentiment
Bitcoin’s price had dropped roughly 10% since mid-December, falling from a peak of $106,000 to about $96,000 by January 14. Analysts attributed this decline to broader macroeconomic concerns, particularly lingering inflationary pressures.
“The recent pullback reflects an adjustment to unfavorable economic conditions, with inflation continuing to dominate the narrative,” noted analysts at Steno Research.
However, there are signs the cryptocurrency could be poised for a recovery.
“Market froth has significantly decreased, but demand remains stable,” crypto analytics firm Glassnode stated in a January 15 report.
The report added that Bitcoin’s spot price remains above critical support levels, suggesting the bullish structure of the market is intact for now.
As market participants wait for clearer signals from policymakers, Bitcoin’s trajectory remains tied to macroeconomic developments and regulatory actions.
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