In an unexpected turn of events, cryptocurrency prices experienced a rally following Monday’s significant sell-off. Bitcoin (BTC) managed to climb back, reaching an impressive high of $97,300 on Tuesday as traders turned their attention to the latest batch of U.S. inflation data, with more reports expected tomorrow.
The price drop below the $90,000 threshold was met with swift buying, fueled by reports suggesting that Donald Trump is preparing first-day executive orders aimed at benefiting the cryptocurrency industry. This surge was further bolstered by softer-than-expected U.S. Producer Price Index (PPI) readings for December, instilling greater confidence among investors.
As of this writing, BTC is trading at approximately $96,500, up 3% from the previous day, while the CoinDesk 20 Index, a broader market benchmark, outperformed with gains of 5%. Additionally, altcoins such as Ripple’s XRP and dogecoin (DOGE) showcased even stronger performances, with respective advances ranging between 6% and 7%.
In the context of traditional financial markets, the tech-heavy Nasdaq and the S&P 500 indices closed the day nearly flat, illustrating a sense of caution among investors.
When taking a broader perspective, Bitcoin’s behavior over recent weeks indicates a consolidation phase above the $90,000 mark. However, soaring bond yields and a rising U.S. dollar have significantly influenced market dynamics globally. Many market players have adjusted their anticipation of lower interest rates in the U.S. this year in light of the recent positive economic data.
The forthcoming Consumer Price Index (CPI) report scheduled for Wednesday holds the potential to stir additional volatility in markets and provide traders with further insights into the Federal Reserve’s policy direction for the year.
Beyond immediate market reactions, Trump’s inauguration ceremony, set for Jan. 20, could also have profound implications as speculation mounts regarding the incoming administration’s pro-cryptocurrency initiatives.
K33 Research previously anticipated that the inauguration could trigger a sell-the-news event, influenced by elevated expectations. However, due to the early-year sell-offs observed in both stock and cryptocurrency markets, their analysis was revised.
According to their report, “While our monthly outlook favored selling at the inauguration, we’d like to rephrase this strategy: selling BTC at the inauguration appears considerably less appealing unless we observe a substantial resurgence of market momentum in the coming six days.” They further noted, “The S&P 500 has closed its post-election gap, and BTC has touched two-month lows.”
The authors concluded by stating, “De-risking strategies will depend heavily on the upcoming week’s price action and will likely be short-lived, as we maintain bullish long-term expectations for Trump’s influence on BTC.”
