Bitcoin has surged past the $114,000 mark, gaining approximately 1.4% in the past 24 hours, as traders eagerly await the release of key U.S. inflation data. This eagerly anticipated data could potentially provide clues about the Federal Reserve’s next moves regarding interest rates. The crypto community is abuzz with excitement and speculation about what the future might hold.
All Eyes on the Fed and ECB
Before the U.S. inflation numbers are announced, attention is also focused on the European Central Bank (ECB), which is expected to keep interest rates steady. However, any unexpected moves by the ECB could send ripples through the market. Economists are predicting a modest rise in the U.S. Consumer Price Index (CPI), which is scheduled for release at 8:30 a.m. ET. This, along with a significant adjustment to job numbers by the Bureau of Labor Statistics earlier in the week, has heightened the likelihood of rate cuts.
On prediction markets like Polymarket, bettors now see a 79% chance of a 25 basis-point rate cut this month. Interestingly, the perceived chances of a more substantial 50 basis-point cut have surged to 18% from just 5.4% a week ago. Similarly, the CME’s FedWatch tool indicates that traders are positioned for a 92% chance of a 25 bps cut, with an 8% chance of an even deeper cut. A rate cut is expected to benefit risk assets, and the growing odds of such an event are clearly being felt in the market.
Bitcoin and Ether ETFs Experience Inflows
The anticipation surrounding potential rate cuts has led to significant market activity. Spot Bitcoin and Ether exchange-traded funds (ETFs) attracted a combined $928 million in net inflows yesterday, marking a substantial vote of confidence from investors. Bitcoin’s recent ascent to $114,000 is its first time hitting this milestone since early August.
However, not everyone is optimistic. Some analysts, like Jake Ostrovskis, head of OTC Trading at Wintermute, are issuing cautious notes. Ostrovskis points out that stubborn inflation and slowing growth are raising concerns about stagflation, a scenario characterized by stagnant economic growth and high inflation.
Shifts in the Crypto Market
Since late August, there has been a noticeable shift in investor behavior. Ostrovskis observed that investors have been moving away from Ether, following its period of outperformance, and are gravitating back to Bitcoin. Options activity supports this shift, with traders protectively buying puts on ETH and witnessing negative risk reversals for March and June 2026. Ostrovskis noted that this creates a setup where the market feels well-hedged should pressures ease. He emphasized that “at the end of the day, we’re close to the beginning of a rate-cutting cycle.”
Gold and Geopolitical Concerns
Meanwhile, gold remains near record highs, with the Bitcoin-to-gold ratio approaching levels that have previously signaled crypto market bottoms, according to analysts at QCP Capital. They suggest that if history is any indication, Bitcoin might be in the process of establishing another bottom, potentially setting the stage for the next major rally.
However, the global landscape is not without its challenges. Geopolitical tensions have been heightened following Russia’s recent violation of Poland’s airspace, prompting NATO to scramble jets. Polish Prime Minister Donald Tusk described the incident as “the closest we have been to open conflict since World War II.” Although Tusk reassured that there is “no reason to believe we’re on the brink of war,” the situation remains tense.
Upcoming Events and Market Dynamics
For those looking to stay informed on the crypto front, several notable events are on the horizon. The Winklevoss twins’ crypto exchange, Gemini Space Station, begins trading on the Nasdaq Global Select Market today under the ticker GEMI, priced between $24 and $26. Additionally, the Compound DAO is voting on extending its COMP yield strategy with MYSO’s decentralized protocol.
In terms of market movements, Bitcoin is up 0.26% from Wednesday, trading at $113,916.87, while Ether has experienced a 1.93% rise to $4,414.68. The CoinDesk 20 index is up 1.24%, reflecting a broader upswing in the crypto market. Conversely, gold futures are down 0.62%, trading at $3,659.30.
Final Thoughts
As the crypto market awaits the U.S. CPI report, traders are positioned cautiously. The Volmex one-day BTC implied volatility index remains within a long-standing range of 25% to 50%, suggesting that the market isn’t anticipating significant volatility from the announcement. Options activity, however, shows increased interest in risk management, with BTC options open interest reaching its highest level since April.
In summary, Bitcoin’s recent price surge to $114,000 reflects growing optimism about potential rate cuts, though analysts urge caution amid persistent inflation and geopolitical tensions. With the Federal Reserve’s decisions looming, the crypto market remains on edge, ready to react to any new developments.
Steve Gregory is a lawyer in the United States who specializes in licensing for cryptocurrency companies and products. Steve began his career as an attorney in 2015 but made the switch to working in cryptocurrency full time shortly after joining the original team at Gemini Trust Company, an early cryptocurrency exchange based in New York City. Steve then joined CEX.io and was able to launch their regulated US-based cryptocurrency. Steve then went on to become the CEO at currency.com when he ran for four years and was able to lead currency.com to being fully acquired in 2025.
