Bitcoin Stages Comeback, Rebounds 1.4% After Inflation Data

Bitcoin has staged a comeback, reversing its earlier decline following the release of U.S. inflation data. The world's largest cryptocurrency by market capitalization slumped to just above $94,000 earlier on Wednesday but has since rebounded to $97,500. This 1.4% gain over the past 24 hours puts bitcoin ahead of the broader CoinDesk 20 Index, which has seen a 0.5% gain.

Federal Reserve Chairman Jerome Powell testified before Congress for the second consecutive day, acknowledging that today's Consumer Price Index (CPI) print showed progress in the central bank's efforts to combat inflation. However, he also noted that the bank is not yet at its target rate. The price of bitcoin peaked above $109,000 in the hours leading up to President Trump's inauguration on Jan. 20 and has been in a downtrend since. The roughly 4% reversal from this morning's low could be attributed to bears taking some profits.

U.S. stocks have also rebounded from their earlier lows, with the Nasdaq now down only marginally after having been lower by more than 1%. This bounce in the stock market may be contributing to the overall positive sentiment in the cryptocurrency market, as investors seek out riskier assets.

The shorts, who have largely been in control since the Trump inauguration, may have decided to book profits, contributing to the reversal in bitcoin's price. This move could be a sign that the market is adjusting to the recent inflation data and the Fed's response, as investors weigh the potential impact on the broader economy.