Bitcoin remained resilient in the face of significant turbulence in global markets caused by a surprisingly robust US inflation report, which dampened expectations for swift interest rate cuts. The digital currency was trading at $49,500 as of 10:21 a.m. Wednesday in Singapore, hovering near its highest level in over two years and showing little change since the release of above-forecast figures on US consumer prices in January.
In contrast, the S&P 500 Index experienced a 1.4% decline — its worst performance on a day with high CPI (Consumer Price Index) readings since September 2022. Gold prices slumped, and bond yields surged as traders adjusted their expectations for a Federal Reserve rate cut before July.
Tony Sycamore, a market analyst at IG Australia Pty, noted the “impressive resilience” of Bitcoin despite the adverse shift in risk sentiment overnight. Additionally, separate technical analysis based on chart patterns suggests the possibility of a temporary decline to the high $30,000s.
Bitcoin has benefited from sector-specific factors, including the launch of US exchange-traded funds (ETFs) dedicated to the cryptocurrency. These ETFs, introduced by institutions like BlackRock Inc. and Fidelity Investments, have attracted a net inflow of $3.3 billion since trading commenced on Jan. 11.
Furthermore, anticipation surrounding the Bitcoin halving scheduled for April has bolstered sentiment. The halving event is expected to reduce the supply of Bitcoin, a trend historically associated with upward pressure on prices.
Caroline Mauron, co-founder of digital-asset derivatives liquidity provider Orbit Markets, remarked, “We expect the market to take a brief pause here after a remarkable four-month rally, before the upcoming Bitcoin halving event becomes the focus of attention.”
Bitcoin has tripled in value since the beginning of last year, staging a remarkable recovery from the digital asset rout of 2022. Options market activity suggests that traders are eyeing prices beyond the previous record of almost $69,000 achieved in November 2021.
