Bitcoin Tests $94K Support Amid Inflation Fears and SoftBank Loss

Bitcoin's price experienced a sell-off on Feb. 12, falling 1.8% after the US reported a higher-than-expected Consumer Price Index (CPI) for January. The cryptocurrency tested the $94,200 support level, raising questions about its potential to reach the highly anticipated $100,000 mark. Traders are concerned about global economic growth and the impact of recent policy measures, such as tariffs, on Bitcoin's price.

The stock market also reacted negatively to the inflation report, with the S&P 500 futures erasing gains from the previous eight sessions. This suggests that Bitcoin's recent downturn is largely driven by broader market sentiment and fears of contagion, reinforcing the perception of an ongoing correlation between equities and digital assets. Short-term traders reduced Bitcoin exposure due to its 40-day correlation of 65% with the S&P 500.

Bitcoin investors face additional pressure from SoftBank, the Japanese financial conglomerate, which reported a $2.4 billion loss in Q4 after two consecutive quarters of profits. Most investors still view Bitcoin as a risk-on asset, meaning losses in SoftBank's portfolio prompt traders to move into cash. This risk aversion was reflected in the strengthening US dollar and increasing US 10-year Treasury yields.

Adding to Bitcoin's bearish sentiment was a decline in miners' profitability, measured by the Hashrate Price Index. Reduced demand for block space has pressured transaction fees, raising concerns that miners facing high energy costs may be forced to shut down operations. A decline in miner revenues puts pressure on those with higher energy costs or less efficient hardware, potentially forcing them to shut down operations if the Hashrate Index drops.

Macroeconomic factors, venture capital underperformance, and miner profitability concerns have weighed on sentiment, but these developments alone do not justify Bitcoin trading below $95,000. The cryptocurrency remains positioned as a risk-off investment in the view of BlackRock, the world's largest asset manager.