Bitcoin prices rallied today.
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Bitcoin prices rallied on Wednesday, January 14, reaching their loftiest value in roughly two months as various factors combined to drive gains.
The world’s most prominent digital currency approached $98,000, according to Coinbase data from TradingView.
At this point, it was up more than 9% from the intramonth low of approximately $89,500 it reached on January 8, additional Coinbase figures from TradingView reveal.
Further, it was trading at its highest since roughly mid-November.
Several analysts spoke to the variables that contributed to this upside.
When asked for his take, Mike Marshall, head of research at Amberdata, stated via email that “I think there are three factors: $2.1B in stablecoin mints last week now deploying, ETF outflows showing exhaustion, and derivatives signaling accumulation with funding rates strengthening into weakness.”
“Long/short ratios expanded,” he added. “Liquidations minimal. I think the setup is constructive but Q1 brings portfolio rotations and macro uncertainty.”
Brian Huang, cofounder of fintech firm Glider, also highlighted multiple causal factors that caused bitcoin’s latest upside, clarifying via email that “ETF inflows, today’s CPI print, and Microstrategy disclosing more BTC buying are the causes for today’s rally in BTC.”
The latest Department of Labor figures showed that the Consumer Price Index for All Urban Consumers climbed 2.7% over the last 12 months. This data was released after a Marist poll conducted last month showed that 70% of respondents stated that the average family in their respective region was struggling to keep up with living expenses, according to CNBC.
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Many advocates of bitcoin and other cryptocurrencies have described the continuing devaluation of fiat currencies like the U.S. dollar, meaning the slow erosion of their purchasing power, as a reason to purchase bitcoin.
A handful of market observers provided alternative theories for what drove the most recent gains in bitcoin.
“Bitcoin’s move toward $98,000 was driven primarily by spot-led demand, while positioning dynamics amplified the upside,” Vincent Liu, CIO of Kronos Research, stated via email.
“As price reclaimed key resistance, overleveraged shorts were flushed, forcing covering into a relatively thin order book, while longs remained elevated but controlled,” he added, emphasizing the role that leverage played in amplifying the price rally.
Tim Enneking, managing partner of Psalion, also offered an interesting take on the situation, stating that “Somewhat surprisingly, Bitcoin has been behaving like a haven asset ever since Trump sicced his justice department on Jerome Powell, seemingly taking careful aim to shoot himself (and the US economy) in the economic foot.”
Federal prosecutors, who work for the U.S. Department of Justice, have started investigating Federal Reserve Chair Jerome Powell over the central bank’s multi-billion-dollar renovation of its headquarters building, according to CNBC.
This action has provoked widespread concerns about the independence of the financial institution, and government officials working for central banks around the world have voiced their support for Powell in a joint statement.
“We stand in full solidarity with the Federal Reserve System and its Chair Jerome H. Powell,” the signers of the statement said.
“The independence of central banks is a cornerstone of price, financial and economic stability in the interest of the citizens that we serve. It is therefore critical to preserve that independence, with full respect for the rule of law and democratic accountability,” they noted.