Analysts: Favorable inflation data and favorable policy expectations are expected to push risk assets such as Bitcoin to new highs

Odaily Planet Daily News Matt Mena, a cryptocurrency research strategist at 21Shares, attributed the rise of Bitcoin to signs of cooling inflation, which boosted market sentiment and rekindled optimism about risky assets. Mena said: "The December CPI data marks the removal of the last major macroeconomic barrier for Bitcoin prices below $100,000 before Trump's upcoming inauguration. As inflation continues to cool, the overall CPI stabilizes at 2.9% year-on-year, and the core CPI falls to 3.2%. The Fed will adopt a dovish policy." The US core CPI fell year-on-year, starting from 3.3% in November, the first decline since July. Core inflation was lower than expected, rekindling speculation that the Federal Reserve may cut interest rates in 2025. "With Trump's inauguration approaching, favorable inflation data, growth-friendly policy expectations, and technical breakthroughs in stocks and cryptocurrencies provide a solid foundation for continued gains in global markets," Mena added. "This marks the beginning of a potential transition period for investors, with risk assets expected to redefine new highs." Bitfinex Head of Derivatives Jag Kooner emphasized Bitcoin's growing sensitivity to macroeconomic trends: "Bitcoin's correlation with the Nasdaq 100 Index is at its highest level in two years, making it particularly sensitive to CPI data, and as we forecast for the first quarter, Bitcoin is increasingly tied to traditional finance, becoming a faster beta to changes in the macroeconomic landscape. The crypto market may digest the expected rate cuts in 2025 faster than other risk assets." (The Block)