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(Bloomberg) — Bitcoin climbed past $100,000 again after softer-than-expected US inflation helped to rekindle demand for riskier assets ranging from equities to cryptocurrencies.
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The original digital asset has been trading roughly in a range of $90,000 to $100,000 over the past four weeks. The token rose as much as 3.9% to $100,222 on Wednesday. It last reached $100,000 on Jan. 7, or around $8,000 below a all-time high set on Dec. 17.
The correlation between Bitcoin and a gauge of US technology stocks has hit a two-year high, as the equity market’s reaction to US inflation data on Wednesday helped set a stronger tone for digital tokens.
A 30-day correlation coefficient for the largest cryptocurrency and the Nasdaq 100 Index is at about 0.70, data compiled by Bloomberg show. A reading of 1 indicates assets are moving in lockstep, while minus 1 signals an inverse tie.
The inflation report showed a 2.9% increase year-over-year in prices, meeting expectations, and saw month-over-month core inflation at 0.2%, below analyst expectations. Markets had been fretting about the Federal Reserve’s scope for further interest-rate cuts amid a robust US economy and uncertainty over the impact of Donald Trump’s agenda.
The softer core price index helped lift stocks and crypto. The S&P 500 and Nasdaq 100 indexes are up over 1% after the inflation report.
Trump Inauguration
President-elect Trump will be sworn in on Jan. 20 and may unleash a policy blitz. Speculators are weighing up the risk of inflationary tariff and immigration policies against his pledge to make the US the global home of crypto.
“The overall sensitivity to interest rates over the past month suggests increased importance of Wednesday’s CPI print,” K33 Research analysts Vetle Lunde and David Zimmerman wrote in a note. “Additionally, notable Trump momentum may still form in the days leading into the inauguration.”
Hedging activity is picking up in the options market, signaling that investors are positioning for increased volatility, according to trading platform Derive.xyz.
The proportion of bearish bets has climbed, pointing to “hedging against potential downside risks as we approach the inauguration,” said Derive.xyz’s Head of Research Sean Dawson.
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