TLDR
Bitcoin reached $96,580 after a recent dip, with market anticipating key December CPI data expected to show 2.9% YoY increase
President-elect Trump’s team signals pro-crypto stance, including potential executive order and crypto council with 20 industry leaders
CryptoQuant predicts Bitcoin could reach between $145,000-$249,000 by year-end, supported by macro trends and institutional adoption
Market Value to Realized Value ratio at 2.3 suggests room for growth before reaching overheated zone of 3.8-4.0
December’s unexpected 256,000 job gain raises concerns about inflation staying above Fed’s 2% target, potentially delaying rate cuts
Bitcoin has rebounded to $96,580, marking a 5.8% increase in the past 24 hours, as markets prepare for crucial U.S. inflation data and potential crypto-friendly policies from the incoming Trump administration.
The leading cryptocurrency’s recovery comes at a time when investors eagerly await December’s Consumer Price Index (CPI) data, scheduled for release Wednesday at 8:30 am ET. Economists expect the report to show a year-over-year increase of 2.9% and a monthly rise of 0.3%.
Core CPI, which excludes volatile food and energy prices, is projected to increase by 0.3% month-over-month. These figures will play a vital role in shaping Federal Reserve monetary policy decisions for the coming months.
The recovery in Bitcoin’s price aligns with reports that President-elect Donald Trump’s team is preparing to issue a pro-cryptocurrency executive order shortly after taking office. Sources familiar with the matter told Decrypt that the plans include establishing a new crypto council comprising 20 CEOs and industry leaders.
Ryan McMillin, chief investment officer at Merkle Tree Capital, noted that recent Producer Price Index data came in below expectations. “We could see the same for CPI on Wednesday. That would signal the dollar has probably topped out, and risk assets will get some respite,” McMillin told Decrypt.
The anticipated inflation data holds particular importance as it could influence the Federal Reserve’s stance on interest rates. Lower or stabilizing inflation might encourage the Fed to reconsider its higher-for-longer interest rate policy, creating conditions that typically favor risk assets like Bitcoin.
Market data from the CME FedWatch Tool shows divided opinions among traders regarding the Fed’s rate cut timeline for 2025. While some expect two 25 basis point reductions, others believe there may be no rate cuts this year at all.
December’s surprisingly strong job numbers, which showed 256,000 new positions added to the economy, have raised questions about inflation remaining above the Fed’s 2% target. This could potentially delay monetary easing plans and create uncertainty in crypto markets.
McMillin pointed out that Trump’s cabinet confirmation this week, combined with growing statements from his team about plans to weaken the dollar and lower interest rates, could impact market dynamics.
“That could take a little while to calm equity markets, but bitcoin and crypto look set to move up more immediately as the Trump team officially announce their pro-bitcoin and crypto stance,” he explained.
CryptoQuant’s latest weekly report presents an optimistic outlook, suggesting Bitcoin could reach between $145,000 and $249,000 by the end of 2025. The analysis cites favorable macroeconomic trends, the incoming pro-crypto U.S. administration, and historical patterns as supporting factors.
Institutional adoption continues to grow, with addresses holding between 100-1,000 BTC adding $127 billion in 2024. The report notes that Bitcoin is entering the final year of its four-year cycle, traditionally a period of strong price performance.
Historical data indicates potential capital inflows into Bitcoin could reach $520 billion in 2025, building on the $440 billion accumulated since late 2022. This projection considers various market factors and past investment patterns.
The current Market Value to Realized Value ratio stands at 2.3, remaining well below the overheated zone of 3.8-4.0. This metric, which compares Bitcoin’s market capitalization to its realized capitalization, suggests there may be room for additional price growth.
However, market analysts identify several potential risks. These include a possible “sell-the-news” reaction to the U.S. administration’s pro-crypto policies and limited retail investor participation, which could slow market momentum.
The upcoming CPI data release remains a crucial factor that could impact market sentiment. Any variations from expected figures may influence the Federal Reserve’s rate decisions and, consequently, Bitcoin’s price movement.
Bitcoin recently touched $101,192 in early January before retreating, still below its all-time high of $108,135. The price movement followed a three-week period of trading below the $100,000 mark, during which the asset dropped 5.6%.
As of the latest market update, Bitcoin trades at $96,580, showing resilience despite recent volatility. Wednesday’s CPI data release and the incoming administration’s crypto policies will likely determine short-term price action.
