The Consumer Price Index (CPI) released on Wednesday showed that the core CPI index, which excludes food and energy costs, rose 0.3% for the third consecutive month. The overall CPI rose 2.6% from the same period last year, the first year-on-year increase since March this year.
Investors increased their bets on a rate cut at the Federal Reserve's December meeting after the new data was released. The Chicago Mercantile Exchange's FedWatch tool showed that Wall Street's bets on the probability of a 25 basis point rate cut at the December FOMC meeting rose to 82%.
After the CPI data was released, U.S. stocks opened flat before rising. The major indexes closed mixed. The Dow Jones Industrial Average rose slightly by 0.11%, the Nasdaq Composite fell by 0.26%, and the S&P 500 was basically flat.
The crypto market was volatile, with Bitcoin falling to $86,300 earlier in the session before bulls fought back and hit an intraday all-time high of $93,500. At press time, Bitcoin was trading at $90,451.16, up 2.91% in the 24 hours.
Another big news in the crypto space was Trump’s announcement of the creation of the Department of Government Efficiency (DOGE), which will be led by Elon Musk and Vivek Ramaswamy. The news spurred a rally in Dogecoin (DOGE), which surged to $0.44 on Tuesday and retested that resistance on Wednesday.
Coinbase Premium Index Rises to 7-Month High
CryptoQuant data shows that Bitcoin's Coinbase Premium Index, a key measure of U.S. demand, has jumped to 0.2, the highest reading since April, highlighting the huge buying pressure from U.S. traders.
The metric measures the difference between bitcoin prices on Coinbase, which is widely used by U.S. investors and institutions, and on offshore Binance, the world’s largest crypto exchange by trading volume.
While it’s unclear what types of market participants are buying, U.S.-listed spot bitcoin exchange-traded funds (ETFs) opened the day with strong volumes. The BlackRock iShares Bitcoin Trust ETF (IBIT), the largest spot ETF with $40 billion in assets, traded about $1.2 billion in volume in the first hour of trading, making it the fourth-most traded product of all ETFs, according to Barchart data.
In the short term, it may enter a consolidation phase
According to Willy Woo, a statistician and founder of data platform Woobull, BTC may see more consolidation between $88,000 and $91,000 before it is expected to attack the next major resistance level of $102,000.
Woo said on the X platform that when Bitcoin breaks through historical highs, the market lacks historical data as a reference and price movements become more volatile. Therefore, technical analysts often use tools such as Fibonacci numbers and liquidation levels to predict potential resistance levels.
Woo noted that recent Bitcoin price action coincides with Fibonacci levels and liquidation levels within the $88,000 to $91,000 range, suggesting that the current price is in a relatively stable range.
Looking ahead, Woo sees $102,000 as the next significant technical resistance level. This target is based on Fibonacci analysis of historical cycle highs and current cycle lows.
Bitcoin is still in its early stages, but is on track to hit $500,000
“This is no longer the first inning. But it’s still early until Bitcoin reaches $500,000,” Matt Hougan, chief investment officer at Bitwise, wrote in a note to clients on Tuesday.
Hougan said that while the market is expected to pull back into a consolidation phase, “it feels like $100,000 could be just around the corner.”
He also believes that $500,000 per Bitcoin is the correct dividing line between early and late stages, as this marks Bitcoin's true 'maturity', and compares it to gold.
Hougan explained: "Currently, the total market value of gold and Bitcoin is about 20 trillion US dollars. If Bitcoin can occupy half of the market share, the price of each Bitcoin will reach 500,000 US dollars based on the existing circulation." He further pointed out that the attitude of central banks in various countries is a key factor driving the rise in Bitcoin prices.
Hougan believes that if central banks include Bitcoin in their reserve assets, it will significantly drive up the price of Bitcoin. He cited the "Bitcoin National Reserve" plan proposed by US Senator Cynthia Lummis as an example to highlight the possibility of this trend.
The report stated: "If central banks begin to follow suit, Bitcoin's goal of $500,000 will not be far away. But considering that Bitcoin may drive the growth of the entire value storage market and the reality that governments are constantly increasing debt and printing money, Bitcoin's long-term price potential is far more than that. Even reaching $1 million or more is possible."
