Bitcoin's price went up after good news on U.S. inflation, and experts are optimistic about the future. The cryptocurrency increased almost 3% when the December U.S. Consumer Price Index showed lower-than-forecast inflation, with hopes for possible interest rate cuts.
CPI Report Fuels Bitcoin Rally.
On January 15, the CPI report showed that inflation was cooling, and Bitcoin's price began climbing from about $96,000 to near $100,000. The good news was not limited to just Bitcoin because stocks and gold also rose. The prospect of the Federal Reserve cutting interest rates in March, which futures markets now place at a 30% probability, further entrenched market confidence.
Bryan Armour, Director of Passive Strategies Research at Morningstar, said, "Bitcoin trades like a store of value asset such as gold, so I suspect cooling inflation to aid Bitcoin prices." Futures for Bitcoin from February to April have risen 2%-3%, which is a sign of a better medium-term view, CME data shows.
The Trump Effect on Bitcoin's Future.
Even with the recent price increase, experts say Bitcoin's long-term growth depends on President-elect Donald Trump's crypto policies after he takes office on January 20. Trump's plans to support crypto-friendly leaders and position the U.S. as a digital asset hub have created high hopes in the industry.
Chief investment officer at Ledn John Glover said, "The prospects for a rate cut do look like a positive event, but I wouldn't see stable prices before then unless and until Trump acts seriously to lighten regulations on cryptos.
Recent Market Corrections and What Lies Ahead.
Bitcoin's price declined by 10% since mid-December, when its price peaked to a record level of $106,000 before falling to about $96,000 on January 14. Experts claim the decline is attributed to harsh economic conditions with other concerns, primarily inflationary woes.
Nevertheless, most people think Bitcoin is about to bounce back. According to the crypto data service Glassnode, in its report dated January 15, it said that the market has burned off all excess speculation but that demand remains very high. Also, the price of Bitcoin is above important support levels, which indicates that the bullish structure of the market is intact.
A significant point to know: As easing inflation is buoying Bitcoin up, the cryptoeconomy, looking for decisive direction from America's new Administration concerning its perspective towards digital money. Ups and downs in short-run trends, it may but easy economic policies plus crypto amenable policies open it up. Not only investment professionals but market experts will anxiously wait upon crypto policies formulated by Trump while expecting next monetary measures by Fed Reserves.
