Bitcoin prices repeatedly climbed above $100,000 today. (Photo illustration by Chesnot/Getty … [+] Images)
Bitcoin prices rallied above $100,000 on Wednesday, January 15, recovering from their recent drop below $90,000 as anticipation surrounding crucial policy decisions propelled the digital currency higher.
The world’s most valuable digital currency by market value surpassed $100,700 close to 3:30 p.m. EST, according to Coinbase data from TradingView.
After rising to this local high, the cryptocurrency fell back, dropping to roughly $99,500 within the next few hours, additional Coinbase data from TradingView indicates.
However, the digital asset resumed its roller-coaster ride, surging to nearly $100,900 around 7 p.m. EST. At this point, it had climbed more than 14% since falling to nearly $89,000 on Monday, January 13.
When providing explanations for what fueled these latest gains, analysts highlighted a handful of developments that could result in bullish policy.
For starters, several market observers emphasized the recent inflation reports, stating that the results they conveyed could cause Federal Reserve officials to take a less hawkish approach.
The Federal Open Market Committee (FOMC)’s decision to hike the target range for the benchmark federal funds rate by over 500 points in less than two years generated significant visibility as it placed strong, upward pressure on borrowing costs.
In addition to the aforementioned government reports, and their potential impact on monetary policy, some analysts highlighted President-Elect Donald Trump’s upcoming inauguration, describing it as likely benefiting the world’s most prominent digital currency.
Brett Sifling, wealth manager for Gerber Kawasaki Wealth & Investment Management, spoke to the first potential cause, stating via emailed commentary that “It seems that the Bitcoin rally today was sparked by the CPI report today.”
He was referred to the Labor Department announcement revealing that in December, the Consumer Price Index for All Urban Consumers increased at an annualized rate of 0.4%.
“With this surprisingly solid inflation information today, I’d assume that market participants are more willing to take on risk in hopes that the report translates to a more lenient fed,” he specified.
“However, this theory is conflicting with the strong jobs report that was recently released. Investors are balancing both reports in hopes that interest rate hikes are on pause in 2025,” Sifling stated.
Greg Magadini, director of derivatives for digital asset data provider Amberdata, also mentioned these government reports in emailed commentary.
“The big drag on the US risk-assets and Bitcoin, has been the monetary environment since December’s FOMC meeting,” he noted.
“Yesterday we had the Core PPI coming in at +.1% (versus a +.3% median forecast) and the Core CPI today at +.2% (vs +.3 median), despite non-core CPI coming hot due to oil prices,” Magadini continued.
“Together, this was really bullish as the inflationary environment looked less dire this week. Combine this macro outlook with Monday’s inauguration, which promised to be bullish for the crypto industry, markets have rallied back to the Bitcoin $100k level,” he stated.
“This price level has been a magnet for option buyers and remains the biggest source of dealer inventory concentration on Deribit,” said Magadini, pointing to activity in the derivatives markets.
Disclosure: I own some bitcoin, bitcoin cash, litecoin, ether, EOS and SOL.
