Why did the price of bitcoin rise today?

 The bitcoin price surge on January 20 and the fast-rising market-wide cryptocurrency price led some investors to hope that the year-to-date high of $21,427 is a sign that 4,444 BTC

losers

$21,857

bottomed.

Despite the negative news about crypto lender Genesis, the price of Bitcoin continues to rise. Bitcoin price surge after Genesis filed for bankruptcy could mean the news has been priced into BTC.

After continuing last week's rally in equities, the US Dollar Index (DXY) cools down and positive comments from the Federal Reserve release inflation data in the index report The Consumer Price Index (CPI) could keep BTC above the $21,000 range.

One of the main catalysts for the recovery seems to be the positive CPI report released by the Bureau of Labor Statistics (BLS) on January 12, which showed a 0.1% drop in overall inflation for all urban consumers.

Inflation fell by the most since April 2020. Stock traders are also responding by pushing prices higher in hopes that positive data will spur the Federal Reserve to raise interest rates. less than during the Federal Open Market Committee (FOMC) meeting on Feb. 2. 1.

Positive inflation data has attracted the attention of the US Federal Reserve, which is responsible for raising interest rates. Federal Reserve Governor Christopher Waller hints at the direction interest rates could take in January

20:

"Based on the data available at the moment, it looks like there's going to be some headwinds ahead, so I'm currently advocating a 25 basis point increase at the next FOMC meeting later in the day. this month."

The stock market opened higher on January 20, with the Dow Jones, S&P 500 and Nasdaq all posting positive numbers. As reported by Cointelegraph, Bitcoin's price action remains highly correlated with US equities, and today's rally is no exception to this trend.

Here are some reasons why Bitcoin price is up today.

Positive CPI Data Leads to New Bitcoin Price YTD

Since Bitcoin Price Hit Annual High of $21,427 on Jan 1st On February 20th, some analysts now consider $21,000 as the new floor price for BTC. While BTC trading volume has not recovered to pre-FTX levels, $58.5 billion in Bitcoin transactions released on January 15 has set a new yearly high.

CPI report shows inflation falling for the sixth consecutive month. One of the biggest drops in the report was the sharp drop in gas prices. Prices for used and new cars are also down

The warning in the CPI report is that food and service costs remain high.

If inflation has peaked, the Federal Reserve will likely forgo aggressive interest rate hikes. Many traders agree that if the Federal Reserve turns around its current policy of quantitative tightening and raises interest rates, the price of BTC could skyrocket.

The FOMC begins its meeting on January 31 with a rate decision expected the next day. Positive inflation data could impact the FOMC decision and push BTC and equities higher. Following disappointing results from US banks in the fourth quarter of 2022, markets recovered as investors awaited more details on the potential Fed decision.

Long-term data in favor of Bitcoin, market analysts say

Investor confidence in the crypto market may also increase as they believe the US Federal Reserve can interest rate increase. reported that the Fed's strategy is working.

In the Fed statement, the possibility of a policy change remains open and tied to inflation:

brings inflation down to 2% over time. In determining the rate of growth within the future target range, the committee will take into account cumulative monetary policy tightening, the lag by which monetary policy affects economic activity and inflation, as well as the economic and financial development.

According to CME Group, a derivatives market with a global standard for interest rate estimates suggests a high probability that gains will be lower than previously expected in the near future.

US Dollar Cooling Is Good For Bitcoin

Another positive sign for Bitcoin price is the cooling of the US Dollar Index (DXY). Historically, when DXY returns, sentiment towards risky assets like Bitcoin should increase