Analysts anticipate Bitcoin rally following positive CPI data

Cryptocurrency analysts are expressing optimism for a Bitcoin rally after the release of favorable U.S. inflation data, which has sparked a surge in Bitcoin's (CRYPTO:BTC) price.

On January 15, the U.S. Consumer Price Index (CPI) report indicated lower-than-expected core inflation for December, leading to a 3% increase in Bitcoin's spot price, pushing it from around $96,000 to nearly $100,000.

This positive inflation data has also influenced other assets, including stocks and gold, which saw similar price increases.

Futures markets suggest a 30% probability of the Federal Reserve cutting interest rates in March, a scenario that typically benefits cryptocurrencies.

“Bitcoin trades like a store of value asset such as gold,” stated Bryan Armour, director of passive strategies research at Morningstar, indicating that cooling inflation could support Bitcoin prices.

As of January 15, Bitcoin futures for February through April have risen by 2% to 3%, reflecting a more optimistic medium-term outlook for the cryptocurrency.

However, analysts warn that any sustained price rally may depend on actions taken by U.S. President-elect Donald Trump regarding pro-crypto policies after his inauguration on January 20.

John Glover, chief investment officer of cryptocurrency lender Ledn, remarked that while the market has reacted positively to potential rate cuts, volatility is expected to persist until Trump implements significant regulatory changes for crypto.

Trump's election victory on November 5 has raised hopes for a more favorable regulatory environment for cryptocurrencies, with promises to appoint industry-friendly leaders and establish the U.S. as “the world’s crypto capital.”

Despite the recent rally, Bitcoin's price had experienced a decline of approximately 10% since mid-December when it reached an all-time high of around $106,000.

Analysts at Steno Research attributed this sell-off to unfavorable macroeconomic conditions and ongoing inflation concerns.

Now, however, there are signs that Bitcoin may be poised for a relief rally as demand remains strong and key support levels hold.

Glassnode noted that a significant amount of froth has exited the market while demand stays robust, suggesting that the bullish market structure remains intact for now.

At the time of reporting, the Bitcoin (BTC) price was $99,431.10.