Bitcoin’s Rally Above $50,000 Reverses as CPI Print Exceeds Expectations
Bitcoin’s rally above $50,000 took a downward turn on Tuesday morning after the release of the January Consumer Price Index (CPI) print. The CPI data came in at 0.3%, surpassing expectations and leading to weakness across financial markets. This unexpected level of inflation has dashed hopes of a rate cut by the Federal Reserve in March.
The market reaction was immediate, with Bitcoin losing support at $50,000 and dropping to a low of around $48,400. However, dip buyers managed to push the cryptocurrency back above $48,600.
One of the driving factors behind Bitcoin’s surge to $50,000 has been the anticipation of Ethereum-based exchange-traded funds (ETFs) receiving approval. Similar effects were seen in the past with Bitcoin ETFs. The market has been fueled by the news surrounding this topic, but now it needs new fuel to sustain its positive momentum.
Another influential factor is the approaching April halving for Bitcoin. This event greatly affects the overall mood in the market and contributes to the price surge. It reminds many of the market dynamics in 2020 when Bitcoin’s price was on the rise, and there was speculation about whether the previous all-time high would be surpassed.
According to data on inflows into U.S.-listed spot BTC ETFs, it is suggested that Bitcoin could reach a price of $112,000 during this bull market cycle. Historical trends show that market bottoms occur at an MVRV of 0.75 and tops at 3.9. **With the current spot ETF inflow trends, the top price could range from $104,000 to $112,000. Without hype, the price would be expected to be around $55,000 to $59,000, based on the current level of 2.07.**
At the time of writing, Bitcoin is trading at $48,560, marking a 2.05% decrease on the 24-hour chart. **The future of Bitcoin’s price will depend on how these influencing factors continue to play out in the market.**
Analyst comment
Negative news.
As an analyst, the market is likely to experience some volatility and uncertainty in the short term due to the unexpected CPI print and the dashed hopes of a rate cut by the Federal Reserve in March. The market will need new fuel to sustain its positive momentum, such as positive developments around Ethereum-based ETFs and the approaching April halving for Bitcoin. However, based on historical data and current trends, Bitcoin could potentially reach a price range of $104,000 to $112,000 during this bull market cycle.
