Bitcoin Hits Two-Month High as CPI Steadies and Short Covering Accelerates

Jan 21, 2026

Bitcoin’s rally drew fuel from short covering as steady inflation data and the start of earnings season reinforced trader expectations.

In brief

• Roughly $587 million in crypto short positions were liquidated as Bitcoin’s price pushed to its strongest level since mid-November.
• December’s CPI showed inflation holding at 2.7% year over year, with modest monthly gains keeping Treasury yields and the dollar relatively stable.
• U.S. equities sent mixed signals early in earnings season, with bank stocks weighing on the Dow while the S&P 500 and Nasdaq hovered near recent highs.

“Bitcoin’s price appears closely tied to expectations around global liquidity,” Abra founder and CEO Bill Barhydt told Decrypt. “Markets anticipate a sharp expansion in the money supply this year, driven largely by increased government bond purchases, while retail stimulus around the midterm elections could provide an additional boost.”

Read the full article on Decrypt.