Bitcoin price rebounds sharply, reclaiming critical price levels, as the latest CPI release suggests the US inflation rate rose to 2.9%.

US Inflation Rises to 2.9%, Bitcoin Responds

Bitcoin has renewed its push toward $100,000, reclaiming the $99,000 mark following the latest U.S. Consumer Price Index (CPI) data release. The December 2024 report indicates a 2.9% annual increase in inflation, up from November’s 2.7%, primarily driven by rising energy costs. 

This inflation uptick has influenced both traditional and crypto markets. Bitcoin’s ascent past $99,000 shows investor optimism. Traditional markets have also responded favorably, with the Nasdaq Composite experiencing a 1.7% gain in the past 24 hours.

Analysts are now monitoring the Federal Reserve’s potential response to these inflation figures. The core CPI, which excludes volatile food and energy prices, rose by 3.2% over the last 12 months, slightly below expectations. This suggests that while inflation is present, underlying pressures may be stabilizing. 

Consequently, the Federal Reserve may opt to maintain current interest rates in their upcoming meeting, with the possibility of rate cuts later if core inflation trends toward their 2% target. 

A Weakening DXY

Market experts have discussed these developments. In the hours leading to the CPI release, Michaël van de Poppe emphasized that it is important to monitor the U.S. Dollar Index (DXY), noting that it has reached a major resistance level near 110. A rotation here could signal the beginning of a new rally for Bitcoin and altcoins.

It’s key to watch the $DXY index in the coming weeks.

Arrived at a higher timeframe resistance.

If this rotates, that’s the kickstart for the next leg upwards for #Bitcoin & likely the start of the bull for #Altcoins. pic.twitter.com/RkBmyxWRVb

— Michaël van de Poppe (@CryptoMichNL) January 15, 2025

Further, minutes after the CPI data release, van de Poppe called attention to weakness in yields and the DXY. However, he noted that the crypto market continued to show strength, indicating a favorable environment for Bitcoin’s upward movement.

In contrast, analyst Ali Martinez highlighted potential risks before the CPI release. Citing the TD Sequential indicator, Martinez identified sell signals on the 4-hour charts for Bitcoin, Ethereum, XRP, and Solana, suggesting a possible market correction. 

The TD Sequential indicator has flashed sell signals on the 4-hour charts for #Bitcoin, #Ethereum, $XRP, and #Solana, suggesting a potential price correction across the crypto market ahead of the CPI report. pic.twitter.com/za9PsZNdOk

— Ali (@ali_charts) January 15, 2025

However, Bitcoin’s resilience and subsequent rise have challenged this outlook, but the market remains indecisive and largely volatile.

Bitcoin Reclaims $99K, Eyes $100K

On Bitcoin’s 4-hour chart post-CPI release, the asset is trading at $99,301, rebounding from a support level of $89,164 earlier in the week. This recovery has formed an ascending channel, indicating a bullish trend. 

Bitcoin is approaching a critical resistance at $100,757, which aligns with the upper boundary of the ascending channel. Surpassing this level could lead to further gains.

Meanwhile, Fibonacci retracement levels show that the 0.618 mark at $95,405 served as strong support earlier. However, the 0.786 level at $97,099 was an intermediate barrier before Bitcoin surpassed $99,000 while the 1.272 extension at $101,998 and 1.618 extension at $105,485 are potential upside targets.

The Directional Movement Index (DMI) supports the bullish sentiment, with the +DI rising to 30.18, indicating increased buying pressure, and the -DI declining to 17.4. The Average Directional Index (ADX) at 20.14 suggests a moderately strong trend with potential for further gains.