Bitcoin Eyes Record High as U.S. Reaches Trade Deal with China and Inflation Data Approaches

Bitcoin nears record highs fueled by a US-China trade deal and expectations of easing inflation data. As Bitcoin approaches $104,000, analysts see potential for continued gains in the altcoin market. Ether and other cryptocurrencies also show strong performances, suggesting a bullish sentiment as markets react to the forthcoming CPI reports.

Bitcoin is on the verge of making headlines as it inches closer to record highs, driven by reduced tensions of US-China trade negotiations and anticipated drops in inflation data. Currently, Bitcoin stands at approximately $103,937.67, just a stone’s throw from its all-time high of $109,350, which could unleash further momentum in the altcoin market as well. Investors are hopeful that a slow down in the consumer price index (CPI), set to be released this week, could also provide a boost.

Just last Sunday, US Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer announced that a trade agreement had finally been reached. The deal follows a rigorous two-day negotiation session in Geneva and will be detailed in a joint statement later today. After weeks of escalating tensions and retaliatory tariffs between the two economic powerhouses, the markets might react positively if inflation data reflects the easing sentiment.

Analysts had previously considered March’s inflation figures to be somewhat misleading, as they overlooked the ongoing trade disputes. But with the recent trade deal in place, that narrative shifts. If CPI data indeed indicates a softening, it could lead to bets on potential Federal Reserve rate cuts, further fueling Bitcoin’s rally. Conversely, should the CPI show higher-than-expected inflation, it might be brushed off as insufficient in the face of newly settled trade relations.

The CPI report set for Tuesday is anticipated to show that year-on-year living costs eased to 2.3% in April, dropping from 2.4% in March. Core CPI, which excludes volatile food and energy prices, is likely to hold at 2.8% year-over-year, thanks to easing rent costs. “If this expectation holds, the market could see the inflation report very positively,” stated Markus Thielen, founder of 10x Research. He noted, “Barring any negative tariffs news, the inflation data this week could act as a bullish catalyst.”

In the marketplace, Bitcoin underwent a striking V-shaped recovery from a low of $75,000 just a few weeks ago. Last week, it jumped a solid 10% amid fresh inflows into spot exchange-traded funds (ETFs). Demonstrating investor confidence, BlackRock’s new bitcoin ETF has seen net inflows for 20 consecutive trading days, garnering over $5 billion in funding, according to SoSoValue. Meanwhile, the Federal Reserve kept interest rates steady between 4.25% and 4.5% and continued to signal caution regarding inflationary pressures.

Ether, the second-largest cryptocurrency, has made waves too, rising by 39% to $2,500. This marks its strongest week since December 2020. Other coins like XRP, DOGE, ADA, and SOL all followed suit, with significant gains ranging from 9.7% to 56%, depending on each cryptocurrency.

Market experts at HTX Research observed that the current situation hasn’t sparked a speculative frenzy just yet, which might mean that the rally can keep going. Their insights note that Bitcoin’s options implied volatility remains steady in the 50%–55% range, significantly lower than the peaks experienced in previous bull markets. The report also pointed out that the open interest for CME Bitcoin futures stands at $14.8 billion, indicating that leverage remains at manageable levels.

As long as yields stay below 4.8% and ETF inflows continue unabated, Bitcoin might consolidate within the $105,000–$115,000 range as it gears up for the next major move. The excitement in the air is palpable, and many are watching the coming inflation data closely.

In summary, Bitcoin is rallying towards record highs amid easing US-China trade tensions and potential decreases in inflation. With upcoming CPI data expected to reflect a slowdown, investors are eagerly awaiting what it could mean for crypto markets. The positive trajectory seen in Bitcoin and major altcoins is driving heightened interest, especially with significant ETF inflows. However, the next few days will be crucial in determining if this rally continues, as attention shifts to the inflation figures with an eye on potential Federal Reserve rate cuts.

Original Source: www.coindesk.com