Bitcoin briefly touches the $100,000 mark, as cooling US inflation stokes wider market exuberance
2025-01-16
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Bitcoin rebounded to briefly touch the $100,000 mark, posting a 24-hour increase of 4%, according to The Block's Price Page. Ether also showed a strong performance, rising past $3,400, while solana has exceeded the $200 mark, reflecting renewed momentum across the crypto market. 
21Shares Crypto Research Strategist Matt Mena attributed bitcoin's rally to signs of cooling inflation, which has bolstered market sentiment and renewed optimism for risk assets.
"The December CPI data marks the removal of the last major macroeconomic barrier keeping bitcoin below $100,000 ahead of Donald Trump’s upcoming inauguration," Mena said. "With inflation continuing to cool, as headline CPI held steady at 2.9% year-over-year and core CPI eased to 3.2%, the stage is set for a dovish pivot by the Federal Reserve." 
The decline of the U.S. year-over-year core CPI rate from November's 3.3% marked its first reduction since July. This cooler-than-expected core inflation has rekindled speculation about potential Federal Reserve rate cuts in 2025.
While interest-rate futures traders anticipate the Fed will hold off on cutting rates until June, they are now pricing in roughly even chances of a second rate cut by year-end. This shifting outlook on monetary policy has created a more favorable environment for bitcoin and other risk-sensitive assets.
As market optimism builds, bitcoin's performance is closely tied to broader economic trends. Amidst the cooling inflation, the S&P 500 is testing key levels near 5,935.02, further boosting investor confidence in risk assets. If this critical resistance level is surpassed, it could signal the continuation of a broader global asset bull market, Mena said.
"As the Trump inauguration approaches, the confluence of favorable inflation data, pro-growth policy expectations, and technical breakouts in both equities and crypto provides a robust foundation for a sustained rally across global markets," said Mena. "This marks the dawn of a potentially transformative period for investors, with risk assets poised to redefine new highs."
Bitfinex Head of Derivatives Jag Kooner highlighted bitcoin’s increasing sensitivity to macroeconomic trends.
"Bitcoin’s correlation with the Nasdaq 100 is at a two-year high, making it particularly reactive to CPI data," Kooner told The Block. "As we forecast for Q1, bitcoin is becoming more intertwined with traditional finance, acting as a faster beta to shifts in the macroeconomic landscape. Crypto markets are likely to price in expected 2025 rate cuts more quickly than other risk assets."
Bitcoin futures funding rate rises
Perpetual futures funding rates have also risen significantly, signaling growing market optimism. According to Coinglass data, the open interest-weighted funding rate for bitcoin perpetual futures climbed to 0.0076% during the latest 8-hour contract cycle across major exchanges.
Meanwhile, cryptocurrency short liquidations have surged. Coinglass data revealed that out of over $263 million in liquidated positions, more than $169 million were short liquidations.
Bitcoin alone accounted for over $63 million of these liquidations, with over $47 million shorty positions wiped out, indicating strong upward pressure on its price.
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