Bitcoin Recovers Above $70,000 After U.S. Inflation Data Boost Rate Cut Odds

Bitcoin rose nearly 5% in 24 hours to reclaim $70,000 after falling toward $60,000 earlier this month, while the CoinDesk 20 index gained 6.2% in the same period following a cooler-than-expected U.S. January CPI reading of 2.4% year-over-year versus 2.5% forecast. Traders on Kalshi priced a 26% probability of a 25 bps rate cut in April, up from 19% earlier in the week, while Polymarket odds rose from 13% to 20%. The Crypto Fear & Greed Index has remained in "extreme fear" since early this month at levels similar to the 2022 bear market during the FTX collapse; Bitwise analysts reported $8.7 billion in realized bitcoin losses over the last week—the second-largest drawdown after the 3AC episode—and noted that bitcoin treasury firms faced over $21 billion in unrealized losses before the rebound reduced that figure to $16.9 billion. Bitwise said rotating supply from weaker hands to conviction investors has historically coincided with market stabilization phases, though such shifts take time, and research analyst Danny Nelson told CoinDesk that fear of further downside remains the dominant force, with thinner weekend volumes, seller exhaustion and what some view as a "textbook capitulation event" helping underpin the rally even as many participants use price recoveries to sell.