Bitcoin Surges Past $114,000 as Investors Await US Inflation Data and Potential Interest Rate Cuts

Francisco Rodrigues reports (all times Eastern Time unless otherwise stated) Over the past 24 hours, Bitcoin has seen a 1.4% increase, with investors eagerly awaiting crucial US inflation data that may influence expectations for a widely discussed interest rate reduction by the Federal Reserve. Prior to the release of this data, the European Central Bank will announce its interest rate decision, which is expected to remain unchanged, although any unexpected moves could cause market volatility. Economists predict a modest increase in the US Consumer Price Index (CPI), scheduled for release at 8:30 a.m., coupled with the significant jobs revision from the Bureau of Labor Statistics earlier this week, indicating growing prospects for rate cuts. Bettors on Polymarket now see a 79% chance of a 25 basis-point rate cut this month, while the perceived odds of a 50 basis-point drop have risen to 18% from 5.4% in just a week. The CME's FedWatch tool shows traders are positioned for a 92% chance of a 25 basis-point cut and an 8% chance of a deeper cut. A rate cut would be beneficial for risk assets, and the increasing likelihood of such an event is already being felt in the market. Spot bitcoin and ether ETFs attracted a combined $928 million in net inflows yesterday, with bitcoin reaching $114,000 for the first time since early August. However, some analysts are urging caution, citing persistent inflation and slowing growth, which are raising concerns about stagflation. Jake Ostrovski, head of OTC Trading at Wintermute, noted that since late August, investors have been moving away from ether after its outperformance and back into bitcoin. Options activity reflects this shift, with traders buying protective puts on ETH and risk reversals for March and June 2026 dipping into negative territory. Ostrovski stated that this 'creates a setup where the market feels well hedged' should pressures ease, adding that 'we're close to the beginning of a rate-cutting cycle.' Meanwhile, gold remains near record highs, with the bitcoin-to-gold ratio approaching resistance levels that previously signaled crypto market bottoms, according to analysts at QCP Capital. They suggest that if historical patterns repeat, bitcoin could be in the process of establishing another bottom, setting the stage for the next major upward move. However, geopolitical tensions should not be overlooked. Russia's violation of Poland's airspace this week prompted NATO to scramble its jets, with Polish Prime Minister Donald Tusk stating that this was 'the closest we have been to open conflict since World War II.' Tusk emphasized that there's 'no reason to believe we're on the brink of war,' and Moscow denied responsibility for the attack, but it's essential to remain alert. Key events to watch include token events, conferences, and token talks. Other important areas of focus are derivatives positioning, market movements, bitcoin statistics, technical analysis, crypto equities, crypto treasury companies, and ETF flows, including spot BTC and ETH ETFs, as reported by Farside Investors.