The price of Bitcoin (BTC) is back above $100,000 after new data showed inflation continuing to cool in the U.S.
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A weaker-than-expected inflation reading for December has reignited investors’ risk appetite, sending stocks sharply higher, with the blue-chip Dow Jones Industrial Average rising 700 points on the day and the technology-laden Nasdaq Composite index gaining 2.45%.
The rally has extended to cryptocurrencies, pushing the price of Bitcoin, the largest digital asset by market capitalization, up more than 3% to as high as $100,715.13. Other cryptocurrencies are up even more, with the price of Ethereum (ETH) rising 7% to $3,433.16 and XRP (XRP) surging 15% to a record high above $3 per digital token.
Risk Appetite Returns
The return of investors’ risk appetite comes after the release of the December Consumer Price Index (CPI), which showed that inflation unexpectedly slowed in December, especially in key categories such as rent prices. A day earlier, the Producer Price Index (PPI), showed that wholesale prices rose less than expected in December. The economic data left investors cheering and sparked a rally in both stocks and crypto.
The latest price increase is a sharp reversal for BTC, which as recently as January 13 was trading at $90,000. Bitcoin had been steadily declining after U.S. Federal Reserve Chair Jerome Powell sounded an inflation warning in December, and as bond yields spiked, leading investors to dump risk assets.
Bitcoin’s price rose 120% in 2024 to reach a record high of nearly $110,000.
Is BTC a Buy?
Most Wall Street firms don’t offer ratings or price targets on Bitcoin, so we’ll look at the cryptocurrency’s three-month performance instead. As one can see in the chart below, the price of BTC has risen 43% in the last 12 weeks.
