Bitcoin edges higher as investors digest Fed's inflation concerns

The cryptocurrency market has experienced a modest uplift over the past 24 hours, with total market capitalization nudging above $3.3 trillion. This increase comes as market participants digest the Federal Reserve’s January meeting minutes, which highlighted concerns over inflationary pressures stemming from proposed tariffs and immigration policies. The Federal Open Market Committee reiterated its focus on making "further progress on inflation" before considering any additional rate cuts, choosing instead to maintain the federal funds rate at 4.25%–4.50%.

Bitcoin has climbed modestly to around $97,200, marking a 1% gain over the past day, yet it remains in a consolidation phase, trading within a broad range of $93,000 to $100,000.

"Market participants should closely monitor the Federal Reserve's policy direction, as these events are likely to influence liquidity and investor sentiment, as bitcoin's ability to maintain the $92,500 support level will be crucial in determining its near-term trajectory," Nexo Dispatch Analyst Iliya Kalchev told The Block. "Additionally, Ethereum's Pectra upgrade and the evolving regulatory environment for crypto ETFs warrant attention, as they may introduce new dynamics to the market."

Optimism observed in bitcoin derivatives

QCP Capital analysts observe that derivatives market investors are increasingly buying high delta bitcoin options that could quickly profit if prices rise — indicating an expectation of another strong upward move in bitcoin.

"On the options front, there has been strong demand for February to April high delta bitcoin calls, likely driven by short-term bullish sentiment following Trump's statements and speculation around a potential Strategic Bitcoin Reserve," QCP Capital analysts said. "Additionally, 25 Delta implied volatility has flipped to skew in favor of calls across all tenors, signaling market positioning for a second leg in the bull run."

Solana sustains reputational damage

With altseason still out of reach, Build on Bitcoin co-founder Dom Harz noted that Solana’s reputation has taken a hit following recent high-profile memecoin controversies, and he observed that the memecoin frenzy appears to be cooling off.

"This week’s rug-pull accusation surrounding Argentinian President, Javier Milei’s LIBRA token, along with earlier controversies like Donald Trump’s TRUMP, MELANIA and BARRON and Hawk Tuah Girl’s HAWK, may have done serious damage to the memecoin bullrun," Harz said. "While memecoins will always be relevant for a section of the community, their dominance in mainstream media narratives and investor attention is fading, and this has had a direct knock-on effect on Solana, as we see with the decrease in the chain’s liquidity."

He said that Solana’s stronghold over memecoins may have tarnished the entire chain’s reputation. "Now Solana is increasingly associated with scams and sensationalist headlines rather than genuine innovation," Harz told The Block. "On the other hand, despite underwhelming performance in this bull run, Ethereum has maintained its reputation as the go-to chain for builders; because builders, like investors, follow opportunity, and With the Pectra upgrade on the horizon, developers and investors may see the memecoin era winding down and refocus on Ethereum."