Bitcoin Attempts $92K Breakout as Stocks Hit New Record on Low US CPI Data

Bitcoin traded above $92,000 on Tuesday as institutional demand for spot Bitcoin ETFs increased, with a net inflow of $116.67 million on Monday. The price of Bitcoin found support near $90,000 on Thursday and began a modest recovery. Meanwhile, the U.S. Consumer Price Index (CPI) for December is due for release, which could introduce volatility as it influences expectations for Federal Reserve rate decisions according to market analysis.

The U.S. CPI data could help reduce concerns that the Fed will be pushed to cut rates unreasonably, according to Commerzbank Research's Christoph Rieger. The core CPI is expected to rise 0.3% in December, slightly above the 0.2% in the prior month. Any deviation from these expectations could alter the Fed's rate path and affect risky assets like Bitcoin as market analysis suggests.

Strategy Inc. added to its Bitcoin holdings by purchasing 13,627 BTC, bringing its total reserve to 687,410 BTC, as part of an ongoing accumulation strategy. This move underscores institutional confidence in Bitcoin's long-term potential. Ethereum also showed positive momentum, trading above $3,100 and supported by the 50-day EMA.

Why Did This Happen?

Bitcoin's recent price action reflects a mix of technical and institutional factors. A close above the descending trendline could reinforce bullish momentum, potentially leading to a breakout toward the 100-day EMA at $95,940. If Bitcoin breaks the 50-day EMA, it could face a correction below $90,000.

The U.S. CPI data is a critical event as it influences investor sentiment and the timing of potential Fed rate cuts according to market analysts. The market is also watching for any surprises in the data, which could lead to increased volatility in risky assets like Bitcoin.

How Did Markets React?

Stocks, including the S&P 500, reached new records as investors interpreted the CPI data as a sign of slowing inflation. The broader market's positive performance has spilled over into the crypto space, with Bitcoin and Ethereum both showing signs of strength.

Institutional demand has also played a role in Bitcoin's performance. Spot ETFs have seen increased inflows, and companies like Strategy Inc. continue to accumulate Bitcoin. This accumulation strategy indicates long-term confidence in the asset's potential.

What Are Analysts Watching Next?

Market participants are closely monitoring the U.S. CPI data due for release on January 13. A reading that aligns with expectations could provide clarity on the Fed's rate path. A significant deviation could trigger increased volatility and shift investor sentiment.

Technical indicators for Bitcoin and Ethereum are being closely watched. A close above the 50-day EMA for Ethereum could lead to further gains. For Bitcoin, a move above the 100-day EMA at $95,940 would be a key milestone.

In addition to economic data, regulatory developments and institutional activity will continue to influence market sentiment. The debate over allowing crypto in 401(k) plans and the SEC's stance on crypto regulation are also under scrutiny.

Investors are also keeping a close eye on the broader macroeconomic environment. The U.S. jobs report, which showed a 4.4% unemployment rate and a 50,000 increase in payrolls, has reinforced expectations that the Fed will hold rates steady at its January 27-28 meeting according to economic analysis. This stability could support risk-on sentiment in both traditional and crypto markets.