Bitcoin's $100K Test Looms as Inflation Data Looms

Bitcoin's price hovers around $104,000, but analysts warn of a potential drop to $100,000 in the coming week. The shift in focus from Trump's inauguration to U.S. inflation data and jobs reports is expected to influence the crypto market. While inflation eased modestly in December, it has been "sticky" in recent months, which may not bode well for Bitcoin. Ethereum, however, has outperformed Bitcoin today following the SEC's approval of Bitwise's BTC-ETH exchange-traded fund. Net inflow for existing Ethereum ETFs turned positive, with funds adding ETH worth $67.8 million to their books.

If today's inflation figures are disappointing, it could indicate that the Federal Reserve will maintain its current stance on interest rates. However, some analysts suggest that an easing of inflation could boost expectations of future rate cuts, driving the bull market up. Despite potential short-term challenges, the medium- and long-term outlook for both Bitcoin and Ethereum remains positive. Jerome Powell's recent comments on U.S. banks working with crypto firms and the removal of the restrictive SAB 121 accounting rule are seen as signs of further deregulation and growth in the U.S. and broader cryptocurrency market.

Additional positive factors for Bitcoin include President Donald Trump's tariff rhetoric, which has already driven up the price of gold. With gold inventory levels at their highest since 2022, the impetus for an additional reserve asset, such as Bitcoin, is strong. Recent moves by various states to establish BTC reserves further support this trend. As the crypto market continues to evolve, investors and analysts alike will be closely monitoring U.S. economic data and regulatory developments to gauge the potential impact on Bitcoin and other cryptocurrencies.