Bitcoin surged above $95,000 on Tuesday, reaching its highest level in over 50 days. A mix of easing inflation in the U.S. and increasing geopolitical risk has triggered a broad influx of capital into the cryptocurrency market.
Height increase occurred after a sharp warning from the U.S. State Department. The U.S. government advised its citizens to 'leave Iran immediately' and prepare for prolonged communication disruptions.
The warning came at a time when mass protests are ongoing in Iran, and rhetoric from Washington toward Tehran is intensifying. Fears are growing over a broader conflict in the region.
The removal of a key macroeconomic risk by the U.S. consumer price index, along with the resurgence of geopolitical risk, strengthened Bitcoin's appeal as a hedge.
The U.S. travel warning regarding Iran became another catalyst. When war risks rise, markets often seek safe or alternative assets.
Bitcoin is increasingly serving as a geopolitical hedge during global crises. The potential escalation in the Middle East and the internet blackout in Iran reinforce its role as an asset beyond government control.
Headlines gained strength, so investors quickly shifted to Bitcoin and other liquid cryptocurrencies.
Bitcoin, which started the day around $91,000, rose over 5% within a few hours. The broader cryptocurrency market also climbed, with Ethereum, Solana, and XRP prices all moving higher.
The rally began earlier in the day when the U.S. consumer price index showed stable inflation. Prices are still rising, but the pace is not accelerating.
This is significant for the cryptocurrency market. When inflation remains under control, the Federal Reserve does not need to keep raising interest rates. It also avoids the risk of a sudden recession caused by abrupt tightening of policy.
For investors, this provides a safer backdrop for holding riskier assets such as Bitcoin. The CPI report removed the main downside risk just when Bitcoin stabilized after weeks of forced selling by ETFs.
This move didn't come out of nowhere. Earlier in January, U.S. spot Bitcoin ETFs recorded outflows of over $6 billion. Late buyers from the October rally exited at a loss.
This sell-off pushed Bitcoin down to around the ETF cost level, approximately $86,000, where pressure eased. ETF flows have now stabilized, suggesting the market cleanup phase is nearly over.
At the same time, exchange data show that global buyers are absorbing the ETF surplus. U.S. institutions held back from exiting the market instead of selling. The premium on Coinbase dropped below zero, indicating caution rather than panic.
Bitcoin broke above $93,000 after the CPI report was released. This signaled that sellers had lost the upper hand. A rise above $95,000 confirmed new demand.
With stable inflation and weakening ETF pressure, geopolitical stress became the spark that brought capital back into the market.
For now, Bitcoin is regaining momentum after a mid-cycle correction. If ETF inflows return and geopolitical tensions persist, traders will look at $100,000 as the next major test.
The current rally shows that Bitcoin continues to function as a macro asset and a hedge against crisis in an increasingly unstable world.
