The further growth of Bitcoin and the entire cryptocurrency market depends on the influx of external liquidity. It only appears with a decrease in inflation and a softening of the Fed's policy.
The market is currently awaiting fresh inflation data (CPI) in the USA. It will be published on February 13. This data will show whether cheap money will appear in the system. This is not about an immediate pump, but a foundation for movement for months ahead. Such thoughts were shared by blogger Coin22 in his new video.
https://youtu.be/e8M-qCvwy_8
Any growth starts with money coming into the spot market. Without new capital, assets cannot grow for long.
There are two sources of liquidity:
Capital flow from other assets.
External money through the Fed and U.S. Treasury policy.
The market is currently counting on the second option.
The key indicator is inflation. According to forecasts, the consumer price index may drop to 2.5%. The difference between 3% and 2.5% seems small. For the Fed, it is significant. The regulator's target is 2%. This means inflation is already close to being controlled.
Why this is important for the crypto market:
High rates make loans expensive.
Investing becomes more difficult.
Money goes into bonds.
Risky assets remain unfavored.
If inflation falls, the picture changes:
Rates stop rising or go down.
Bond yields are decreasing.
Capital is looking for higher yielding markets.
Interest in cryptocurrencies is increasing.
There is also a second factor — the labor market. In January, the U.S. cut 108,000 jobs. This is the worst January since 2009.
Weak employment cools the economy. Consumption decreases. Price pressure falls. In such a situation, the Fed more often resorts to policy easing.
Historically, the regulator reacts faster to rising unemployment than to inflation itself. Therefore, the combination of these two factors increases the chances of a rate cut.
Market expectations are also influenced by politics. Donald Trump stated that the U.S. economy could grow by 15% if Kevin Worsh leads the Fed.
The figure looks inflated. But the market cares about the signal itself.
Their approaches are different:
Jerome Powell — high rates and strict policy.
Kevin Worsh — cheap money and growth incentives.
If rates drop to the 2.75–3% range, money will start flowing out of bonds. They will seek higher yielding assets, including cryptocurrencies.
Worsh also proposes changing the rules of the Fed and the Treasury. It's about debt, yields, and bond buybacks. Such models have been applied in history. They provided liquidity but created risks for the bond market.
The scenario discussed by the market looks like this:
The beginning of the year — economic slowdown and market correction.
Pressure on the current Fed chair.
Change of leadership.
Transition to soft policy.
Increase in liquidity and market recovery.
In the short term, the main trigger is inflation data.
If the CPI comes in below 2.5%, the market will start pricing in a rate cut. Then such targets are possible:
$72,000–$73,000 is the liquidation zone for shorts.
$80,000 is strong resistance.
Around $84,000 is the unclosed CME gap.
The inflation report will not trigger an immediate rise. It will set the direction. The entire subsequent market trend will form through liquidity.
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