1. New All-Time High Price
The price of Bitcoin reached a new all-time high exceeding $124,000 during Asian trading sessions, driven by several factors including: strong expectations for interest rate cuts from the Federal Reserve, continued institutional flows towards the currency, and easing regulatory frameworks from the current U.S. administration as seen in the executive order allowing the use of digital assets in 401(k) retirement accounts.
2. Strong Correction After the Rise
After Bitcoin reached a peak close to $124,480 or even higher, it experienced a sharp decline and fell into the range of $118,000 – $120,000. The main reason is the release of unexpected inflation data: the Producer Price Index (PPI) in the United States rose by 0.9%, raising concerns about the Federal Reserve abandoning its easing policy. According to Barron’s, the price dropped to around $120,991, a decline of about 4% during the session. According to El País reports, the drop was about 4.5% after the unexpected inflation data.
What caused these sharp fluctuations?
Expectations for Interest Rate Cuts: The market began to anticipate rate cuts, creating an ideal environment for investing in high-risk assets like Bitcoin.
Institutional Flows: Investments from major treasury companies, alongside institutional activities such as the IPO of the "Bullish" platform, increased demand for Bitcoin.
Regulatory Facilitation: A presidential order was issued allowing for the inclusion of digital assets in retirement accounts, boosting investor confidence in integrating Bitcoin into the traditional financial system.
Unexpected Inflation Data: Inflation surged in the Producer Price Index for the largest increase since March 2022, raising questions about the Federal Reserve's future policy and triggering a wave of selling.
Technical Correction and Technical Crossovers: The price increase created an imbalance between buyers and traders. Widespread long liquidations helped accelerate the sudden decline.
Summary
At the beginning of the day: Record rise to over $124,000 supported by economic, institutional, and regulatory factors.
Later: Sharp decline to the range of $118,000–$120,000, resulting from unexpected inflation data and concerns about a shift in interest rate policy.