Bitcoin and Ethereum prices rallied after the latest U.S. inflation report. The country’s inflation rate rose 0.5 percent in January, according to the Consumer Price Index. That followed a 0.1 percent rise last month. Annual inflation came in at 6.4%, down from 6.5% in the previous month but above expectations for 6.2%.
Bitcoin is trading above $22,000 as traders continue to digest the latest U.S. inflation report. BTC/USD touched a low of $21,632.39 on Tuesday, but bounced back to an intraday high of $22,293.14 the next day. The move pushed the world’s largest cryptocurrency towards a key resistance level of $22,500. At the time of writing, the 14-day relative strength index (RSI) is currently reading 51.96, which is the highest of the past seven days. The RSI seems to be approaching its own upper limit of 60.00. If this momentum is maintained, BTC may not only break through $22,500, but may also hit the $23,000 mark.
Ethereum (ETH) was also up in today’s session as the price broke the nearest resistance level. ETH/USD hit a high of $1,562.03 earlier in the day and was less than 24 hours away from bottoming out at $1,501.80. Due to the move, Ethereum briefly broke above the $1,550 price ceiling after bouncing off the $1,505 bottom. Earlier gains have moderated, with ETH currently trading at $1,557.25, just above the aforementioned ceiling. At the time of writing, the RSI is hovering at 49.86, below its own upper limit of 50.00. In order for Ethereum bulls to return to the $1,600 mark, this ceiling needs to be broken first.
The latest inflation report has had an impact on cryptocurrencies as the data points to increased demand for alternative stores of value. As central banks and governments continue to print money, more and more investors are turning to cryptocurrencies as a hedge against inflation. Continued institutional adoption of digital assets added to the rally, with companies like Tesla investing $1.5 billion in bitcoin earlier this year.
As a result, institutional investor interest in Bitcoin continues to increase, which has pushed its value to new all-time highs in recent months. On the other hand, Ethereum adoption has also increased due to its use in decentralized finance (DeFi) applications as well as non-fungible tokens (NFTs) and smart contracts.