Stocks of bitcoin miners are rising along with the market as traders anticipate a less aggressive Fed

In anticipation of this week's highly anticipated U.S. CPI report, the price of Bitcoin increased to three-week highs.

On January 9, traders flocked to equity markets amid growing expectations that the United States Federal Reserve would soon be able to scale back its zealous fight against inflation, sending shares of publicly traded Bitcoin BTC tickers down $17,219 miners skyrocketing.

The intraday trading results for the bitcoin mining companies Riot Blockchain (RIOT), Hut8 (HUT), Bitfarms (BITF), Marathon Digital Holdings (MARA), and others showed double-digit percentage gains.

The rally was accompanied by a general uptick in equity markets, with the technology-focused Nasdaq rising 2% and the large-cap S&P 500 Index rising 1% before paring gains.

Markets increased in value ahead of this week's eagerly anticipated U.S. Consumer Price Index report, which is predicted to show that cost pressures are continuing to moderate. Data from the Labor Department released on January 7 indicated that wage growth and job creation slowed in December, indicating that the Federal Reserve's campaign to raise interest rates was having the desired results.

The Fed funds effective rate is now expected to peak below 5%, down from 5.06% after the release of the Jan. 6 nonfarm payrolls report, according to swap contracts, according to Bloomberg. Meanwhile, Fed Fund futures prices indicate that investors anticipate less pronounced rate increases in the coming months.

The rally in Bitcoin mining stocks may be attributed to short covering in a market with low liquidity in addition to generally favorable market conditions. Since traders square their positions by purchasing an asset after shorting it earlier, short covering frequently accounts for the early stages of a rally.

Contagion has finally started to spread to the mining industry as a result of Bitcoin's price falling 75% from its peak to its low and numerous crypto companies going out of business. One of the most powerful BTC miners, Core Scientific, filed for Chapter 11 bankruptcy in Texas in December. The same month, New York Digital Investment Group gave mining company Greenridge a $74 million restructuring lifeline.

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