Bitcoin staged a sharp recovery on Friday, reclaiming the $69,000 level after US inflation data came in cooler than expected. The January Consumer Price Index (CPI) rose 2.4% year-over-year, below the 2.5% consensus forecast. The disinflationary signal triggered a rapid rally, with Bitcoin climbing from an intraday low of $65,670 to a high of $69,405 — a 5% gain in under 24 hours that added approximately $70 billion to its market capitalization, lifting it from $1.31 trillion to $1.38 trillion.
Broader Market Reacts Positively
The cooler inflation data reinforced expectations that the Federal Reserve could cut interest rates more aggressively, aligning with President Donald Trump's public demands. The reading also challenged the prevailing view that the administration's reciprocal tariffs would spur an inflationary spike. Most major cryptocurrencies advanced between 2% and 5%, with Bitcoin Cash (BCH) leading large caps with an 8% gain. The total cryptocurrency market capitalization swelled by nearly 4% to $2.42 trillion.
Short Sellers Hit Hard, but Sentiment Fragile
The sudden upward volatility caught bears off guard, triggering over $170 million in short-position liquidations within four hours. Bitcoin shorts accounted for $92 million of the total, followed by Ether shorts at $48 million. Despite the relief rally, investor confidence remains shaky. The Crypto Fear & Greed Index stands at just 8, firmly in “extreme fear” territory, suggesting skepticism about the rally's sustainability.
Equities Rally Fades Partially
US equities also benefited from the inflation data. The Nasdaq surged nearly 200 points to an intraday high of 22,680 before a mid-session reversal erased those gains, though it holds above 22,600. The S&P 500 edged up 0.5%, and the Dow Jones Industrial Average climbed 170 points to 49,620. However, the Dow remains on track to finish the week significantly lower than its Tuesday peak of 50,500. Markets are now watching for any shift in Federal Reserve Chairman Jerome Powell's hawkish stance.
FAQ
- Why did Bitcoin rally? US January CPI came in at 2.4%, below the 2.5% forecast, boosting hopes for Fed rate cuts.
- How big was the move? Bitcoin surged 5% in under 24 hours, adding $70B to its market cap.
- What was the broader impact? Major tokens gained 2-5%, BCH jumped 8%, and total crypto market cap hit $2.42T.
- What does sentiment show? The Fear & Greed Index is at 8 (extreme fear), indicating caution.