Bitcoin is nearing $100K as CPI data shows signs of cooling

Key Takeaways

Bitcoin margin is closer to $100K, rising 2% in 24 hours after better than expected CPI data for December.
Dollar index declines and rate cut expectations for June drive optimism across crypto and traditional markets.

Bitcoin is nearing the $100,000 mark, rising more than 2% in the past 24 hours after a better-than-expected Consumer Price Index (CPI). data encouraging optimism in the financial markets.

The largest crypto asset by market cap climbed $2,000 after the data release, reaching an intraday high of $99,400. Bitcoin is currently trading at $99,000, consolidating its position as the rally continues.

December's CPI increased 0.4%, slightly above analysts' expectations and November's increase of 0.3%.

On a year-over-year basis, CPI came in at 2.9%, in line with forecasts but marking an increase from the previous 2.7%.

Core CPI, which excludes volatile food and energy prices, rose 0.2% month-on-month, in line with forecasts and down from 0.3% in November. Year over year, core CPI eased to 3.2%, slightly below forecasts and the previous month's rate of 3.3%.

The pace of core inflation, closely watched by policymakers, remains above 3%, frustrating officials despite a faster decline in core inflation. However, the data has supported market sentiment, as traders now expect an earlier easing of monetary policy.

The dollar index (DXY), which is often linked to Bitcoin, declined 0.5% to 108.5 after the CPI release. This marks a major retreat from Monday's high of 110, triggered by strong labor market data.

The weakening dollar sent both traditional and crypto markets higher, with the S&P 500 and Nasdaq opening up 1.4% and 1.7%, respectively.

In the crypto space, Bitcoin's rise follows weeks of range trading driven by macroeconomic data and monetary policy expectations.

The fund had consolidated below $100,000 since the hawkish comments of Federal Reserve Chairman Jerome Powell in December. Strong economic and inflation data initially dampened expectations for rate cuts this year, but today's CPI report reignited optimism.

The FedWatch CME Tool now presentations 44.5% probability of a rate cut at the June 18 meeting, up from 39% in September. However, the likelihood of subsequent cuts remains below 30% for later appointments.

Tuesday's Producer Price Index (PPI) data for December also showed cooler-than-expected inflation readings, supporting Bitcoin's sudden reversal. fall below $90,000 earlier in the week.