Why did Bitcoin break through $97,000?

Title: “Bitcoin’s Strategic Rebound: A Post-CPI Bull Case for 2026” Author: AInvest News Editorial Team Translation: Peggy, BlockBeats

Editor’s Note: Last night, Bitcoin experienced short-term consecutive breakthroughs, with a 24-hour increase of 3.91%. This article analyzes three key factors—macro liquidity, institutional behavior, and on-chain valuation—to explain why Bitcoin may still see a structural rebound: first, if the Federal Reserve begins cutting interest rates and implementing QE in 2026, liquidity reflows will once again boost risk asset valuations; second, during market pullbacks, ETF funds retreat, but core institutions continue accumulating amid volatility, positioning themselves for a rebound; third, multiple on-chain valuation indicators suggest Bitcoin is approaching its historical “value zone,” providing a more cost-effective entry window for medium- and long-term investors.

Below is the original text:

The cryptocurrency market, especially Bitcoin (BTC), has long been regarded as an important indicator of macroeconomic changes and institutional sentiment. As we approach 2026, multiple macroeconomic tailwinds and the reflow of institutional funds are converging, laying the groundwork for a strategic bullish rebound in Bitcoin prices. This article will analyze how Federal Reserve policy paths, inflation cooling, and changes in institutional behavior collectively form a compelling bullish thesis for Bitcoin over the next year.

Macro Trends: Fed Policy Shift and Inflation as Catalysts

The Federal Reserve’s decision to initiate rate cuts and quantitative easing (QE) in the first quarter of 2026 marks a critical policy shift. These measures aim to stimulate economic growth and address persistent but easing inflation pressures. Historically, such policies tend to benefit risk assets, including Bitcoin.

By the end of 2025, core CPI has cooled to 2.6%, easing market concerns over long-term high inflation and reducing the urgency for large rate hikes. In this environment, capital is more likely to reallocate into alternative assets, with Bitcoin increasingly viewed as “digital gold,” serving as a digital counterpart to gold.

The Fed’s QE program could further amplify liquidity in financial markets, creating a favorable external environment for Bitcoin price appreciation. Historically, Bitcoin’s average return in the first quarter is about 50%, often accompanied by a corrective rebound from Q4 volatility. As central banks shift their focus from “controlling inflation” to “prioritizing growth,” the macro narrative around Bitcoin is transitioning from a defensive stance to a more constructive bullish outlook.

Institutional Re-entry: Continual Accumulation Amid Volatility

Despite significant capital outflows at the end of 2025, such as a net outflow of $6.3 billion from Bitcoin ETFs in November, institutional interest remains robust. Companies like MicroStrategy continue to increase their holdings, adding 11,000 BTC (approximately $1.1 billion) in early 2025.

Meanwhile, mid-sized holders further increased their share of the total Bitcoin supply in Q1 2025. These strategic purchases amid volatility reflect a long-term commitment by institutions and medium-sized funds to Bitcoin as a “store of value.”

The divergence between ETF fund outflows and ongoing institutional accumulation highlights a more subtle structural change: when prices decline, retail-driven ETF funds tend to retreat, while core institutional investors appear to be positioning for a rebound in advance.

This trend aligns with Bitcoin’s historical pattern: despite an overall long-term upward trajectory, short-term holders often sell at a loss amid volatility. This is evidenced by the Short-Term Holder Spent Output Profit Ratio (SOPR), which in early 2025 remained below 1 for over 70 days, indicating that short-term holders were generally selling at a loss.

Such behavior often signals a market entering a “long-term accumulation” phase: when short-term investors are forced to cut losses, it creates more strategic buying opportunities for long-term investors and provides conditions for institutions to enter at lower levels.

On-Chain Indicators: Approaching the “Value Zone” but Caution Needed

BTC Absolute Momentum Strategy (Long Only)

Enter long when the 252-day Rate of Change (RoC) is positive and the price closes above the 200-day Simple Moving Average (200-day SMA). Exit when the price closes below the 200-day SMA or after holding for 20 trading days, with profit target (TP) +8% / stop loss (SL) -4%.

By the end of 2025, Bitcoin’s price showed a clear retracement: a total decline of about 6% for the year, with a drop exceeding 20% in Q4. Meanwhile, on-chain signals have diverged. On one hand, indicators like “Percent Addresses in Profit” have continued to weaken, with increased selling by long-term holders; on the other hand, metrics such as “Dynamic Range NVT” and “Bitcoin Yardstick” suggest Bitcoin may be in a historic “value zone,” similar to valuation levels seen at multiple important bottoms in the past.

This contradiction indicates the market is at a critical crossroads: the short-term bearish trend persists, but the underlying fundamentals imply the asset may be undervalued. For institutional investors, this structural divergence offers an asymmetric opportunity—limited downside risk and significant rebound potential. Especially with the potential catalyst of a Fed policy shift and Bitcoin’s historical performance in Q1 2026, this opportunity is further amplified; meanwhile, the narrative of Bitcoin as an “inflation hedge” is regaining market recognition.

Conclusion: The 2026 Rebound Is Brewing

The confluence of macro tailwinds and institutional fund re-entry is building a more convincing bullish case for Bitcoin in 2026. The Fed’s rate cuts and QE, coupled with cooling inflation, could channel more liquidity into alternative assets including Bitcoin; even amid significant volatility in Q4 2025, continued institutional buying reflects confidence in Bitcoin’s long-term value.

For investors, the key takeaway is clear: Bitcoin’s upcoming “strategic rebound” is not just a price correction but the result of changing monetary policy environments and shifting institutional behaviors. As the market seeks a new equilibrium during this transition, those who recognize macro trends and institutional shifts early may position themselves more advantageously for the next phase of Bitcoin’s rally.