Bitcoin Price Surpasses $94,000 as Bulls Regain Control

Bitcoin climbed above $94,000 on Tuesday, reclaiming a key resistance level amid a broader rebound in risk appetite. The price action follows softer-than-expected core inflation data from the United States, which eased concerns over aggressive monetary policy tightening. Technical indicators suggest continued buying interest, though volatility remains high ahead of the Federal Reserve's policy decision.

Ethereum followed suit, rising above $3,100 as market participants reacted to the same macroeconomic signals. Despite intense retail distribution, ETH managed to hold above critical support levels, reflecting improved sentiment in the broader cryptocurrency market. On-chain activity, however, remains a mixed signal for altcoins like XRP.

Cardano (ADA) edged higher, reflecting improved optimism across the crypto market. The price move coincided with softer core inflation data, which reduced the pressure for immediate rate hikes and eased bearish sentiment. Analysts are monitoring ADA's ability to close above key moving averages to confirm a short-term bullish trend.

Why Did This Happen?

The upward move in Bitcoin and other cryptocurrencies came after the release of the December U.S. core Consumer Price Index (CPI) data. Core inflation rose 0.2% month-over-month, below the 0.3% forecast. On a yearly basis, the rate remained at 2.6%, unchanged from November. The data reduced fears of accelerated rate hikes, supporting risk assets.

Federal Reserve Chair Jerome Powell has faced intense political pressure, including a criminal investigation by the U.S. Department of Justice. Powell framed the probe as an attack on the Fed's independence, emphasizing that monetary policy must remain evidence-based rather than politically driven. This political uncertainty has increased demand for assets perceived as neutral or independent of traditional macroeconomic factors.

How Did Markets React?

Bitcoin's price surged as market participants responded to the soft CPI data. Institutional demand for BTC appeared to strengthen, with spot ETFs recording fresh inflows. The price action reinforced a bullish trend above key technical levels, though traders remain cautious ahead of the Fed's policy meeting.

Ethereum saw similar momentum, trading above $3,100 with support from the 50-day EMA. While the RSI and MACD indicators show positive divergence, the token still faces resistance near $3,300. Altcoins like XRP and ADA also showed signs of improvement, but their price action remains more sensitive to retail sentiment.

Gold and silver hit record highs on Monday, outpacing Bitcoin amid macroeconomic uncertainty. The move reflects increased demand for safe-haven assets as investors reassess risk appetites in the wake of Powell's legal challenges. This divergence has raised questions about Bitcoin's role as a store of value in the current environment.

What Are Analysts Watching Next?

Bitcoin's ability to maintain its position above $94,000 will be a key technical test. A sustained close above this level could open the door to a new rally toward $106,000, though traders remain cautious about potential pullbacks. The 50-day EMA at $91,555 serves as a critical support level, and any break below it may trigger a correction.

Ethereum traders are watching for a confirmed breakout above $3,300. A close above this level would increase the odds of a rally toward $3,337, the 200-day EMA. On the other hand, a retreat below $3,000 could signal renewed bearish pressure, particularly if retail distribution intensifies.

Analysts are also monitoring the impact of ongoing legal and political developments surrounding the Federal Reserve. The DOJ's investigation into Powell has raised concerns about central bank independence, which could influence investor sentiment in the short term. Traders are looking for signals from both the Fed and political developments ahead of the upcoming policy meeting.