Bitcoin Surges Past $105K on Inflation Optimism

Bitcoin surged above $105,000 on Friday, driven by optimism fueled by the Personal Consumption Expenditures (PCE) index data, which met inflation expectations. The PCE index, a key indicator closely watched by the Federal Reserve, rose by 0.3% in December, the largest increase since April. This suggests sustained investor optimism and a potential shift in market trends.

The broader financial markets responded positively to the contained inflation data, with Wall Street indexes climbing. The S&P 500 was up 0.4% early on, hinting at a modest decline overall yet maintaining resilience amid fluctuating market sentiment. Tech giant Apple's announcement of record revenues for its fiscal first quarter also positively impacted investor sentiment, overshadowing concerns over AI-related stock valuations in the aftermath of DeepSeek's disruptive launch. The Dow Jones Industrial Average reported an increase of 87 points, or 0.2%, while the Nasdaq Composite gained 0.9%.

According to a recent crypto derivatives report by Bybit, the open interest in Bitcoin has shown an insightful trend: a decline in both realized and implied volatility following a market sell-off earlier in the week. As traders readjust their strategies, the report notes that short-tenor options exhibit lower volatility with a neutral skew, while longer-dated options are skewed towards a bullish bias for out-of-the-money (OTM) calls. This trend indicates a cautious optimism among traders as they navigate post-election market dynamics.

In parallel with Bitcoin's performance, Ether has showcased a strong recovery in the options market despite a slower price recovery compared to BTC. The latest reports indicate that Ether's options trading volume has reached monthly highs, with a significant tilt towards call options, reinforcing traders' bullish outlook. This resilience hints at a strong belief in the asset's potential for future gains. As mentioned in the Bybit report, "protective put buying" is notable in the Solana options market, indicating that investors are strategically hedging their gains amid fluctuating market conditions.

The combination of stable inflation data and positive corporate earnings has set a hopeful tone for markets with Bitcoin leading the charge. As both crypto and equities experience synchronized upward movements, investors should remain vigilant about market signals and trends. The interplay between inflation data and monetary policy adjustments will continue to shape investor behavior, and as recent data suggests, the landscape looks