Bitcoin Reaches Two-Month High as CPI Stabilizes and Short Covering Gains Momentum
Bitcoin experienced a significant surge this week, reaching a two-month high of approximately $95,500. This rise was spurred by the release of inflation data and mixed signals from the traditional equity markets.
Bitcoin Hits Two-Month High Amid CPI Stabilization
The latest Consumer Price Index (CPI) report revealed that inflation remains stable at 2.7% year-over-year. This stability has maintained Treasury yields and the U.S. dollar at relatively consistent levels.
Market Reactions
As Bitcoin prices rose, approximately $587 million in crypto short positions were liquidated. This includes around $292 million specifically tied to Bitcoin, as reported by CoinGlass.
- Bitcoin price increase: +4.5% on the day.
- Current Bitcoin price: ~ $95,500.
- Short positions liquidated: $587 million in total.
Impact of Economic Data
Investors closely monitored the CPI data, which showed year-on-year inflation at 2.7% and core inflation slightly higher at 2.6%. These findings suggest that while inflation remains above the Federal Reserve’s target of 2%, it gives the Fed leeway to maintain current interest rates.
President Donald Trump has pointed to this data as a rationale for the Federal Reserve to adopt a looser monetary policy, particularly as expectations vary on future rate cuts.
Global Events Influencing Prices
Ryan Rasmussen, head of research at Bitwise, highlighted several global events as catalysts for Bitcoin’s recent ascent. These include:
- The collapse of Iran’s fiat currency.
- The U.S. Department of Justice subpoenaing Fed Chair Jerome Powell.
- Recent economic turmoil in Venezuela.
Traditional Markets’ Mixed Signals
While Bitcoin gained momentum, traditional U.S. equities painted a mixed picture. Bank stocks negatively impacted major indices, particularly the Dow Jones Industrial Average, following disappointing earnings from major financial institutions like JPMorgan Chase, whose shares fell over 4%.
In contrast, both the S&P 500 and Nasdaq have remained near their recent highs, signaling some resilience amidst the broader volatility.
Looking Ahead
The anticipation of an increase in global liquidity later this year is providing optimism for cryptocurrency traders. Bill Barhydt, CEO of Abra, noted that this expectation, along with potential retail stimulus related to upcoming midterm elections, contributes to the positive sentiment surrounding digital assets.
In summary, Bitcoin’s rise to a two-month high reflects a complex interplay of macroeconomic factors, including stable inflation data and significant events shaping the financial landscape.
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