Market activity over the weekend showed Bitcoin inching upward by approximately 1.3%, settling at around $69,661. This minor rise comes just shy of the $70,000 threshold, following a volatile trading week influenced by economic variables such as U.S. inflation reports and interest rate movements.
Traders are increasingly banking on speculation regarding potential interest rate cuts, inflows associated with exchange-traded funds (ETFs), and ongoing discussions about cryptocurrency regulations in Washington. With U.S. markets closed for the holiday on Monday, attention now shifts to upcoming events, particularly the release of the Federal Reserve’s minutes on February 18 and critical U.S. economic data set for February 20.
The recent surge in Bitcoin’s price was notably influenced by Friday’s consumer price index (CPI) report, which recorded a modest 0.2% increase for January; the core CPI, which excludes food and energy prices, rose by 0.3%. According to data from Reuters, over the past year, core inflation has decreased to 2.5%, marking a low not seen in nearly five years. Nonetheless, economist James McCann from Edward Jones indicated that while the downward trend is promising, inflationary pressures still remain concerning.
In response to the CPI data, Bitcoin experienced a significant spike, ultimately closing at $69,049.69 late in the U.S. session on Friday, reflecting a substantial 4.94% rise. Treasury yields also saw a pullback, a development that Tim Holland, chief investment officer at Orion, described as “a bit of good news” prior to the extended weekend.
Regulatory discussions also played a prominent role in market dynamics. U.S. Treasury Secretary Scott Bessent called on Congress on Friday to expedite the federal digital asset legislation, suggesting that the proposed Clarity Act would provide much-needed stability to the market amidst prevailing volatility.
Meanwhile, the performance of crypto-related companies has shown varying signals. Coinbase reported an unexpected quarterly loss, its first since Q3 of 2023, attributed to declining trading volumes. The company’s letter to shareholders noted the cyclical nature of the crypto market, but also pointed out stable income streams from subscriptions and stablecoin activities.
As U.S. markets prepare to reopen, ETF performance will be a critical indicator of market direction. Recent data indicated a significant outflow from U.S. spot Bitcoin ETFs, amounting to $410.4 million, primarily impacting BlackRock’s IBIT and Fidelity’s FBTC. Nick Motz, CEO of ORQO Group, characterized this trend as a “liquidity mirage,” cautioning that it could lure retail traders into a chase for momentum that may quickly dissipate.
This scenario holds the potential for swift reversals. If enthusiasm surrounding interest rate cuts diminishes or if ETF outflows continue in the wake of the holiday, Bitcoin’s upward momentum may falter, leading to a temporary retreat. Market positioning remains highly sensitive to macroeconomic headlines.
As investors await the resumption of U.S. equity markets on Tuesday, they will also look for significant data related to spot Bitcoin ETF flows. The minutes from the Fed’s January meeting are set for release on February 18, providing keen insights into the committee’s stance on interest rates and their focus areas—be it services inflation or falling gas prices.
Just two days later, the Bureau of Economic Analysis will unveil its advance estimate for Q4 GDP, along with December’s Personal Income and Outlays data, crucial for assessing the PCE price index—an important benchmark for the Fed’s inflation target.
At this juncture, Bitcoin’s immediate challenge remains: to reclaim and sustain its position above the $70,000 mark as U.S. markets reopen and ETF activity resumes. A shift in the macroeconomic landscape could lead to rapid reactions in market behavior, typically marked by initial price moves followed by subsequent analysis.
