Bitcoin's $100K Dream Dashed by Inflation Fears

Bitcoin's recent rally towards the $100,000 mark has stalled, with the cryptocurrency's price failing to attract sufficient buyers around the $98,000 level. Sellers have since consolidated the price around $95,000. However, the release of the hot Consumer Price Index (CPI) report has sparked concerns that Bitcoin's price could dip below $90,000 this week.

The CPI report for January showed a higher-than-expected inflation rate of 3% compared to last year, accelerating from December's 2.9% rate and exceeding economists' predictions. The index also increased by 0.5% from last month, faster than the 0.4% increase in December and higher than the 0.3% increase economists had predicted.

Following the CPI report, Bitcoin's price took a sharp downturn, falling from a high of $96,000 to about $94,000 within a few minutes. This led to nearly $25 million in total Bitcoin liquidations, with buyers quickly closing out $22 million in long positions.

If the CPI is higher than expected, it suggests that inflation is not decreasing as hoped. This could prompt the Federal Reserve to keep interest rates high or even raise them to manage inflation. High interest rates typically make the dollar stronger and Treasury bonds more appealing, as they offer higher returns. This can lead investors to prefer safer investments over more volatile ones like cryptocurrencies, potentially driving down demand for cryptocurrencies like Bitcoin and leading to lower prices.

Analysts now predict that this surge in inflation might slow down the recent recovery in the crypto market that started after the crash on February 3rd. It is expected that Bitcoin's price could drop to test the $90,000 level this weekend, which could plunge the likelihood of it reaching $100,000 soon.