Bitcoin prices rose today after traders believed news of the Genesis bankruptcy was priced in and unlikely to significantly impact BTC prices.
Bitcoin prices rallied on Jan. 20, a sign some investors hoped for a swift rise in the cryptocurrency’s market-wide price to a yearly high of $21,427.
The price of Bitcoin continues to rise despite negative news about crypto lender Genesis. The surge in bitcoin prices after Genesis filed for bankruptcy means the news has been denominated in BTC.
A cooling U.S. dollar index (DXY) and positive comments from the Federal Reserve could keep BTC above the $21,000 threshold following the release of consumer price index (CPI) inflation data following the stock market’s continued gains last week.
Daily cryptocurrency market performance. Source: Coin360
The main driver of the uptick was a positive CPI report from the U.S. Bureau of Labor Statistics (BLS) on Jan. 12, which showed headline inflation fell by 0.1% for all urban consumers.
This was the largest drop in inflation since April 2020. Equity traders also responded by raising prices, hoping that positive data from the Feb. 1 Federal Open Market Committee (FOMC) meeting would prompt the Federal Reserve to raise interest rates less aggressively.
Positive inflation data from the Federal Reserve, which is in charge of raising interest rates, has come into focus. Fed Governor Christopher Waller hints at where rates will go on Jan. 20:
“Based on the data currently at hand, volatility appears to be minimal, so I’m now in favor of a 25 basis point rate hike at the next FOMC meeting later this month.”
Stocks rose on Jan. 20, with positive data for the Dow, S&P 500 and Nasdaq. As Cointelegraph reported, Bitcoin’s price action is closely correlated with the U.S. stock market, and today’s rally was no exception.
Here are some reasons why the price of Bitcoin is rising today.
Positive CPI Data Leads to New YTD Bitcoin Price Highs
Since the Bitcoin price hit $21,427 on January 20, some analysts are now seeing $21,000 as the new BTC price. While BTC volumes have yet to return to pre-FTX crash levels, the $58.5 billion Bitcoin volume reported on Jan. 15 hit a new yearly high.
The CPI report showed that inflation fell for the sixth straight month. One of the biggest negatives of the report was the sharp drop in gasoline prices. Prices for used and new cars also fell. The CPI report warned that service and food prices will continue to rise.
Once inflation picks up, the Fed may abandon aggressive interest rates. Many traders agree that if the Fed continues with its current policy of quantitative easing and rate hikes, the price of BTC will rise.
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The FOMC meeting starts on January 31 and is expected to decide on rates the next day. Positive inflation data will influence the FOMC decision and boost BTC and stocks. Markets rallied after disappointing Bank of America earnings reports for the fourth quarter of 2022, as investors awaited more details on a possible decision by the Federal Reserve.
Long-term data is positive for Bitcoin, according to market analysts
Investors’ belief that the Federal Reserve may raise interest rates in a small way in 2023 will boost confidence in the crypto market.
In the Fed’s statement, the possibility of a policy change remains open and linked to inflation:
“The Committee expects that continued increases in the target range will be appropriate to achieve a fiscal policy stance sufficient to favor a return to 2 percent in inflation over time.” In determining the pace of future increases in the target range, the Committee will consider the cumulative tightening of monetary policy, monetary The lag of policy effects on economic activity and inflation, as well as economic and financial developments.
The derivatives market for global benchmarks that measure interest rates may be smaller in the near term than previously expected, according to CME Group.
Interest rates may fall. Source: CME Group
interest rate increase