Key takeaways
- Bitcoin inches closer to $100,000, up 2% in 24 hours following better-than-expected CPI data for December.
- The falling dollar index and rate cut expectations for June are sparking optimism across crypto and traditional markets.
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Bitcoin nears the $100,000 mark, up more than 2% in the past 24 hours after better-than-expected Consumer Price Index (CPI) data fueled optimism in financial markets .
The largest crypto asset by market cap soared $2,000 after the data was released, hitting an intraday high of $99,400. Bitcoin is currently trading at $99,000, consolidating its position as the rally continues.
December’s CPI rose 0.4%, slightly beating analysts’ expectations and November’s 0.3% rise.
On an annual basis, the CPI came in at 2.9%, in line with forecasts but an increase from the previous 2.7%.
The core CPI, which excludes volatility in food and energy prices, rose 0.2% month-over-month, in line with projections and down from 0.3%. of November. Year over year, the core CPI fell to 3.2%, slightly below forecasts and the previous month’s rate of 3.3%.
The pace of core inflation, closely watched by policymakers, remains above 3%, frustrating officials despite headline inflation falling more quickly. However, the data boosted market sentiment as traders now expect monetary policy to ease more quickly.
The dollar index (DXY), often inversely correlated with Bitcoin, fell 0.5% to 108.5 following the CPI release. That marks a significant pullback from Monday’s high of 110, triggered by strong labor market data.
The weakening dollar sent traditional and crypto markets higher, with the S&P 500 and Nasdaq opening 1.4% and 1.7%, respectively.
In crypto, Bitcoin’s rise follows weeks of limited trading driven by macroeconomic data and monetary policy expectations.
The asset has consolidated below $100,000 since Federal Reserve Chairman Jerome Powell’s hawkish comments in December. Strong economic and inflation data initially erased expectations for rate cuts this year, but today’s CPI report has renewed optimism.
The CME FedWatch tool now shows a 44.5% probability of a rate cut at the June 18 meeting, up from 39% in September. However, the probability of further reductions remains less than 30% for subsequent meetings.
Tuesday’s Producer Price Index (PPI) data for December also showed colder-than-expected inflation numbers, supporting Bitcoin’s rebound after a sharp fall below $90,000 earlier in the week.
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