Bitcoin at one point spiked above $21,000 amid expectations of inflation peaking

The price of Bitcoin, the world’s largest cryptocurrency by market capitalization, spiked to $21,000 on January 14 amid optimism that it might have bottomed out and inflation has also peaked.

Bitcoin rallied as much as $21,299 in trading on January 14 before gradually declining. Since November 8, the price of this coin has never exceeded $20,000. Ether, the second largest cryptocurrency by market capitalization, also increased by 9.7%. Other cryptocurrencies like Cardano and Dogecoin also recorded significant gains. Solana spiked up to 35%.

Data from CoinGecko also shows that the entire cryptocurrency market capitalization also jumped above $1 trillion for the first time since November 2022. This is the result of a steady price increase, which has lasted from the beginning of 2023 until now. Even many are optimistic that the worst has been left behind.

A significant contributor to the rise of cryptocurrencies is probably the US CPI falling in December compared to the previous month, which has not happened in the past 2.5 years. This has raised hopes that inflation has peaked and that the FED will soon pivot its interest rate policy as well as boost upbeat sentiment in the market.

Sean Farrell, Head of Crypto at Fundstrat, said: “Cryptocurrency performing well after the CPI release shows that the correlation of cryptocurrencies with the macro is not going away anytime soon. What has been achieved this week has been very encouraging, even stopping the sell-offs related to a flurry of news in the crypto market. It is likely that the price of cryptocurrencies has bottomed out.”

The Bitcoin price fluctuated between $16,000 and $17,000 for weeks before skyrocketing to $21,000 today. The upbeat news, from falling CPI to investigators recovering $5 billion in FTX liquid assets, has brought optimism. However, some experts warn investors not to forget that the macro picture is still bleak.

And there’s still the Fed’s policy meeting ahead.