The leading cryptocurrency, Bitcoin, is trading sideways, with the price remaining within a limited range of $22,500 to $23,350. On January 23rd, BTC/USD closed at $23,114 after reaching a high of $23,114.
BTC, the world's largest cryptocurrency by market capitalization, reached $23,000 for the first time since mid-August 2022 on Saturday. This level was breached again on Monday, indicating a possible bullish trend ahead.
This upward trend also pushed the total cryptocurrency market cap above $1 billion for the first time in 5 months. There were numerous reasons for the bullish momentum in Bitcoin prices that drove them above the $23K mark. Let us now examine them.
The CPI report released on January 12 showed a 0.1% decrease in overall inflation, the largest drop since April 2020. The market became more optimistic as inflation continued to fall for six months in a row.
Furthermore, bets on the Federal Reserve backing down from an aggressive interest rate hike increased. As a result, BTC prices increased, raising the prospect of a broad crypto market recovery.
Bitcoin prices were also benefiting from a weakening US Dollar Index. Historically, whenever the DXY falls, risk asset sentiment rises. As a result of the US Dollar Index's weakness, Bitcoin is the riskier asset gain.
Given rising expectations for slower Fed rate hikes, the DXY was under pressure as the week began, testing a new 9-month low.
The correlation coefficient between Bitcoin and major stock indices has recently been very high. The S&P500, Dow Jones, and NASDAQ are the major indices that provide a general overview of the economy. It is not uncommon for interest rates to be lowered, causing the economy to grow and, as a result, equities to rise.
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