Bitcoin Rebounds to $100K as Inflation Cools, Risk Assets Rally

Bitcoin surged past $100,000 on Wednesday, gaining over 3% to hit $100,715.13 during late trading. This marks a 7% two-day rally, driven by investor optimism following favorable inflation data.

Inflation Data Boosts Risk Assets

The December Consumer Price Index (CPI) showed a slowdown in core inflation, sparking buying activity across risk assets.

This followed Tuesday’s Producer Price Index (PPI) report, which revealed lower-than-expected wholesale price increases.

Bitcoin’s rally mirrored gains in equities, reflecting its growing correlation with the S&P 500. Meanwhile, its correlation with gold dropped, highlighting a shift in investor preferences.

Broader Crypto Market Gains

The CoinDesk 20 index, which tracks a broader range of cryptocurrencies, also rose 7%. Major crypto-related stocks joined the rally:

• Coinbase gained 7%.
• MicroStrategy added 5%.
• Mara Holdings increased by 4%.

Recent Bitcoin Volatility

Bitcoin’s resurgence comes after a volatile period. It briefly dipped below $90,000 on Monday, following Federal Reserve Chair Jerome Powell’s inflation warning in December. The warning had caused a sell-off in growth-oriented assets, including cryptocurrencies.

Institutional Influence

The growing popularity of Bitcoin ETFs has institutionalized the asset, aligning its price movements more closely with equities.

This shift underscores Bitcoin’s evolving role as a speculative investment rather than a hedge like gold.

Outlook

Bitcoin’s return to the $100,000 level signals renewed investor confidence, but market participants remain cautious amid lingering inflation concerns.

Whether the cryptocurrency can sustain its momentum will depend on broader economic conditions and regulatory developments.