14.02.202500:45 Forex Analysis & Reviews: Bitcoin in the Eye of the Inflationary Storm

At the beginning of the week, the price of Bitcoin experienced a sharp drop, falling to $94,000 after the release of the U.S. Consumer Price Index (CPI) data for January. The report, published on February 12, revealed that both the headline and core CPI figures exceeded expectations, indicating ongoing inflationary pressures within the U.S. economy. This led to concerns among investors that the Federal Reserve might tighten its monetary policy further, which could negatively affect high-risk assets, including Bitcoin.

Historically, Bitcoin has reacted strongly to macroeconomic reports, but this situation was particularly noteworthy. For the first time, the CPI data was released under the new Trump administration, introducing a political dimension to the market's uncertainty. Shortly after the report was released, Bitcoin dropped nearly $2,000, but by the end of the day, much of that decline had been recovered.

Are Investors Fleeing or Looking for an Entry Point?

The recent sharp drop in the market once again underscored the U.S. market's sensitivity to macroeconomic and political events. One effective way to gauge sentiment among U.S. crypto investors is through the Coinbase Premium Index. This index measures the difference in Bitcoin prices on Coinbase compared to other international exchanges, indicating demand among U.S. investors. A positive index value signals increased demand, while a negative reading suggests that local traders are actively selling.

According to CryptoQuant, the Coinbase Premium Index began to decline even before the CPI release on February 12 and continued to fall immediately afterward. Since Coinbase is the primary entry point for both retail and institutional investors in the U.S., this trend implies that traders were trying to minimize risks in anticipation of negative macroeconomic news.

However, a key question remains: Are investors exiting the market, or are they waiting for a favorable opportunity to buy?

Inflation and Politics: A Threat or an Opportunity for the Crypto Market?

U.S. investors likely anticipated rising inflation and potential tightening measures from the Federal Reserve, which could exert pressure on high-risk assets like Bitcoin. The negative movement of the Coinbase Premium Index supports these concerns. However, historically, periods of high inflation have often acted as a catalyst for Bitcoin's growth, as the cryptocurrency is viewed as a hedge against currency devaluation.

An analysis of the Coinbase Premium Index from January 13 to February 12, 2025, conducted by CryptoQuant, shows that similar temporary dips into negative territory occurred throughout January. Examining the correlation between the index and Bitcoin's price reveals that such episodes are typically accompanied by increased volatility; however, the market tends to recover once uncertainty dissipates. Overall, the index remains close to zero, indicating a balance between risk appetite and risk aversion among U.S. traders.

This analysis confirms that Bitcoin's price is influenced not only by developments within the cryptocurrency industry but also by broader market sentiment. In the event of an unexpected increase in the CPI, the decline in the index suggests that a significant portion of the sell-off originated from U.S. investors.

One Million per Bitcoin: Dream or Reality?

Cathie Wood, the head of ARK Invest, has confidently reaffirmed her prediction that Bitcoin could reach $1.5 million by 2030. This forecast has generated considerable debate within the crypto community, but Wood believes the likelihood of this outcome is increasing. Her projections are based on the potential reallocation of 6.5% of global investment fund assets into Bitcoin (BTC).

ARK Invest outlines three possible scenarios for Bitcoin's future: a moderate forecast of $710,000, a conservative outlook of $300,000, and an optimistic scenario of $1.5 million. These projections correspond to compound annual growth rates (CAGR) of 21%, 40%, and 58%, respectively.

According to ARK analysts, growing institutional recognition of Bitcoin and the development of its infrastructure are laying the groundwork for significant price growth. Major financial institutions are increasingly viewing Bitcoin as a hedging instrument, acknowledging its unique balance between risk and return.

Will Bitcoin Set a New All-Time High?

Currently, Bitcoin is experiencing volatility due to macroeconomic factors and investor expectations. High inflation and Federal Reserve policies may temporarily hinder the cryptocurrency's growth. However, institutional investments, the expansion of decentralized finance (DeFi), and technological innovations are broadening Bitcoin's use cases, which creates significant long-term growth potential.

The market has consistently demonstrated its ability to recover from corrections. If Bitcoin can navigate this uncertain period and maintain its position above key support levels, there are compelling reasons to believe it could reach a new all-time high. Nevertheless, the journey will be challenging, and traders should be prepared for increased volatility.

The central question remains: Will Bitcoin set a new record, or are we facing a prolonged correction? In the short term, macroeconomic pressures might limit gains, but the factors mentioned earlier provide a solid foundation for the next bull market in the long run. Bitcoin is evolving beyond a mere asset and is increasingly becoming a strategic instrument integrated into the global financial system.