During the early afternoon in Eastern time, bitcoin (BTC) saw a significant increase in value, reaching a trading price of $18,800. This represents a 7% increase in value for the day and marks the highest level for the cryptocurrency since it experienced a dip in early November when the crypto exchange FTX collapsed.
During the morning hours, the price of Bitcoin remained unchanged after the release of inflation numbers from the U.S. Labor Department, which were consistent with predictions.
The decline in inflation was the most significant since April 2020. Stock traders are responding by pushing prices upward, with the expectation that the positive data will encourage the Federal Reserve to adopt a less aggressive approach to interest rate hikes during the Federal Open Market Committee (FOMC) meeting on February
Additionally, the stock of the crypto exchange Coinbase (COIN) saw a 4% increase in recent trading, and has experienced a 35% rise so far this year. The progress of stocks for Bitcoin mining companies is even more impressive. Marathon Digital (MARA) has risen 16% on Thursday and 83% year to date, and competitors Riot Platforms (RIOT) and Hut 8 Mining (HUT) have also seen similar growth.
As the price of Bitcoin reached a new yearly high of $18,898 on January 12th, some analysts believe that $18,000 is now considered as the new minimum price for BTC. Despite not reaching pre-FTX collapse levels, the $41.9 billion worth of Bitcoin trading on January 12th also set a new yearly high.The recent Consumer Price Index (CPI) report showed that inflation has been decreasing for the past six months. The report highlights a significant decrease in gasoline prices, as well as a drop in prices for both new and used cars. However, it also noted that the cost of services and food remained high.
The Consumer Price Index (CPI) increased by 6.5% in December compared to the same period the previous year, which is a decrease from the 7.1% increase seen in November. The slower rate of growth is likely to result in the Federal Reserve slowing down its rate hike pace to 25 basis points per meeting instead of the 50 basis points per meeting rate in December and 75 basis points in previous meetings.
If inflation has reached its peak, it’s possible that the Federal Reserve may change its approach to interest rate increases. Many traders believe that if the Federal Reserve were to change its current policy of quantitative tightening and interest rate hikes, the price of BTC could rise.The Federal Open Market Committee (FOMC) begins meetings on January 31st, with a decision on interest rates expected on February
1st. The recent positive inflation data may influence the FOMC’s decision and boost the price of BTC and equities. Investors are also looking to the U.S bank’s fourth quarter of 2022 earnings report which starts on January 13th for more information on the potential Fed decision.
