Bitcoin (BTC) and other virtual currencies move higher as US CPI data was released for December. The CPI number was 6.5%, in line with expectations. However, this reading shows that U.S. inflation is growing at the slowest pace in over a year. This has allowed Bitcoin to surpass $18,000 and hit $18,400 for the first time since November 2022.
Bitcoin Surges Above $18,000 As US CPI is Released
Bitcoin surged from $16,500 to over $18,400 in just a few months, pushing BTC to the highest point since November 2022. This price increase shows that there is a strong interest from investors to enter the crypto market as inflation pressures seem to be easing.
Traditional financial markets have also moved higher. This shows that Bitcoin continues to be correlated to financial markets. The correlation became very clear in recent years when a larger number of investors entered the market and increased the impact that macro events had on Bitcoin and other virtual currencies.
Inflation in the United States is going down as the Federal Reserve increased interest rates last year. However, in recent months, there have been hints that there could be a pivot any time soon, meaning that the interest rates might not be going higher anymore and we could see a stabilization of the monetary policy in the United States.
Things might be different in other countries or regions where inflation might yet not be peeking. Nevertheless, the European Union (EU) has also seen its inflation rate stabilize after multiple years in which inflation skyrocketed and surpassed all-time highs. Despite that, the European Central Bank was not as fast as the U.S. FED to increase interest rates.
According to CoinGecko, one of the largest data providers in the crypto industry, Bitcoin is now being traded above $18,500, which is very positive for this digital currency. In the last 24 hours, Bitcoin registered gains of almost 7%, which result in gains of over 11% in the last 7 days.
The surprising thing is that Bitcoin is the leader among the top 20 cryptocurrencies. It has the highest growth of all the coins besides Avalanche (AVAX), which grew by 15.3% in the last 24 hours. Other coins such as Litecoin (LTC) of Ethereum (ETH) grew between 4% and 6%.
Now, the main question would be to understand how far Bitcoin could go in the coming days and weeks. In the long term, investors and analysts have to understand whether BTC bottomed a few months ago or not. This would be key in order to start a new bull market and see new developments in the crypto industry.
If inflation continues to move lower, then we could see BTC continuing its bull trend. It is clear that investors are looking at the FED and how they regulated interest rates. The faster inflation falls, the faster the bull market will start. It is also worth mentioning that the FED will play a key role in managing market expectations as well.