Crypto Quill

Bitcoin roared back above $68,800 on Friday after softer-than-expected inflation data fueled fresh hopes for Federal Reserve rate cuts in 2026. The sudden 4% jump broke a painful four-month slide and pushed the cryptocurrency closer to a historic reversal zone that has sparked massive rallies in the past.

Traders who endured a 45% crash from the all-time high near $126,000 now see growing evidence that the worst of the sell-off could be over.

Softer Inflation Sparks Immediate Buying Frenzy

The U.S. Bureau of Labor Statistics released January 2026 CPI numbers showing annual inflation at 2.4%, a tick below the 2.5% economists predicted. Core inflation also eased more than forecast.

Lower inflation readings strengthen the argument that the Fed can keep cutting interest rates this year without reigniting price pressures. Markets now price in a strong chance of at least three quarter-point cuts by December 2026.

Risk assets wasted no time. Bitcoin surged from $66,200 to an intraday peak of $68,814 within hours of the release, while the Nasdaq jumped nearly 2% on the same day.

MVRV Ratio Nears the Magic Undervalued Zone

One of the most reliable Bitcoin valuation metrics is flashing a buy signal for the first time since the 2025 bull run began.

The Market Value to Realized Value (MVRV) ratio compares Bitcoin’s current price to the average price at which all coins last moved. As of mid-February 2026, the 30-day average MVRV sits at just 1.2 and continues to fall.

History shows that when MVRV drops below 1.0, Bitcoin has entered deep value territory and delivered average returns above 300% over the next 12 months.

Past cycles saw similar lows:

• March 2020: MVRV hit 0.85 before a 1,600% rally
• July 2022: MVRV touched 0.92 ahead of the 2023-2025 bull market
• November 2025: brief dip under 1.0 preceded the climb to $126,000

Analysts expect the current correction could push MVRV into that coveted zone within weeks if selling pressure stays moderate.

Fear Reaches Extreme Levels Not Seen in Years

The Crypto Fear & Greed Index crashed to 9 this week, its lowest reading since the 2022 bear market bottom.

Values below 20 signal “Extreme Fear” and have historically marked excellent buying opportunities for long-term holders.

Long-term holders appear to agree. Exchange balances continue to drop as investors move coins into cold storage, a classic sign of conviction during downturns.

What Comes Next for Bitcoin Price

Several catalysts line up for the coming months that could fuel the next leg higher:

• Continued cooling inflation keeps the door open for aggressive Fed easing
• Spot Bitcoin ETFs keep soaking up supply (over $8 billion net inflows year-to-date)
• The Bitcoin halving that occurred in April 2024 still has its traditional 12-18 month lag effect ahead
• Growing institutional adoption from pensions, sovereign funds, and corporations

Technical analysts point to the $70,000-$72,000 area as the next major hurdle. A clean break above that level would confirm the bear trap and likely trigger a fresh wave of short covering.

For now, the combination of cooling macro pressures and deeply oversold on-chain metrics has shifted sentiment from despair to cautious optimism overnight.

The Bitcoin winter that wiped out nearly half the market cap since October may have just met its match. Countless investors who missed the ride above $100,000 are asking the same question: did the dip just get bought again?