ASX climbs 0.47% as annual inflation remains at three-year low

The Australian Bureau of Statistics has brought a breath of fresh air to a humid Wednesday afternoon, signalling that annual inflation has remained steady at 2.1%, lower than analysts’ expected 2.3%.

“Ahead of the last RBA meeting for 2024, the latest inflation data continues to support no change to official rates in December but more evidence that the RBA should be cutting rates by May with the worst of the cost-of-living shock behind us,” said Bendigo Bank chief economist David Robertson.

“The 2.1% annual rise in the CPI indicator for October was below consensus and maintained the same pleasingly low rate as the previous month but was driven primarily by electricity rebates.

“Underlying inflation measured by the ‘trimmed mean’ was higher at 3.5% so more progress is needed on this front, with the full quarterly numbers to be released on January 29th.

“Markets had been expecting an RBA cut in February but have recently pared back these expectations and are now aligned to our unchanged view of the easing cycle starting in May.”

Comm Services, Consumer Discretionary and Real Estate all lifted between 0.81% and 0.93% today, with smaller wins in Tech (+0.75%), Consumer Staples (+0.31%), Financials (+0.65%), and Utilities (+0.64%).

Health Care was the only sector in the red with a 0.05% drop, with Energy, Materials and Industrials notching the weakest gains in the sectors.

Best-performing stocks today were Web Travel Group Limited, up 13.24%, and Life360 Inc, up 6.37%.

The ASX200 is currently 0.75% off its 52-week high, having gained 0.87% over the last five trading days.

Small cap gains

Orthocell Ltd (ASX:OCC, OTC:ORHHF) was a significant mover among the small caps, rising as much as 27.56% to a daily high of $0.81 while European Lithium Ltd (ASX:EUR, OTCQB:EULIF) increased by 19.24% to $0.031, Nova Minerals Ltd (ASX:NVA, NASDAQ:NVA) reached $.025, a rise of 13.65% on the previous close and Silver Mines Ltd (ASX:SVL, OTC:SLVMF) was 12.9% higher to $0.105.

Other small cap gainers were Titan Minerals Ltd (ASX:TTM, OTC:TTTNF), up 9.31% to $0.47, Empire Energy Ltd hit $0.2275, an increase of 8.34%, Dynamic Metals Ltd (ASX:DYM) lifted 7.89% to $0.215, Ora Banda Mining Ltd (ASX:OBM) rose 7.52% to $0.715, Polymetals Resources Ltd (ASX:POL) reached $0.73, a rise of 6.57% and Sovereign Metals Ltd (ASX:SVM, OTC:SVMLF, AIM:SVML) moved up by 4.52% to $0.81. 

Bitcoin’s pullback: Is it last flush before $100K?

BTC Markets head of finance Charlie Sherry examines Bitcoin’s recent meteoric rise and the near-term outlook for the cryptocurrency.

Bitcoin’s recent dip to US$92,000 aligns with its typical market behaviour of sharp gains followed by healthy corrections.

Since early November 2024, Bitcoin has surged nearly 50%, bringing it within striking distance of the US$100,000 milestone, a psychological barrier that has historically triggered pullbacks. This price point holds significance, much like the US$40,000 and US$60,000 marks did during previous cycles.

Historical patterns and market cycles

Bitcoin has a history of consolidating after strong rallies:

• In 2020-2021, after an 84% surge, Bitcoin saw an 11% correction before rallying again.
• Later in 2021, a 142% rally was met with a 25% correction, paving the way for a 90% surge.

These pullbacks are part of a cyclical pattern that reduces leverage and consolidates gains before pushing higher. The current drop to US$91.6,000 fits this trend, suggesting it could be the “last flush” before Bitcoin crosses the US$100,000 mark.

Catalysts behind pullback

This pullback is consistent with Bitcoin’s behaviour during past bull markets. Corrections of 10-30% are typical and they play a crucial role in shaking out over-leveraged positions, strengthening support levels and preventing unsustainable price surges.

Several factors are driving this pullback:

Profit-taking – Investors are cashing in on recent gains, a common practice near major milestones.

Market leverage – With US$4.25 billion in short positions below US$100,000, leverage ratios as high as 100x are contributing to heightened volatility.

Psychological resistance – The US$100,000 mark is a strong psychological barrier, creating caution and increased selling pressure as traders test market resilience.

This correction serves as a natural reset, positioning Bitcoin for a more sustainable rise towards new highs.

How low could Bitcoin go?

Looking at past cycles, Bitcoin’s corrections have ranged from 11% to 25%. The current pullback is around 5% from its recent high of US$99,000, indicating it’s within the lower range of typical corrections.

If the dip deepens, Bitcoin could test the US$88,000-$90,000 range, which represents solid support. A deeper correction of 20-30% could take Bitcoin closer to US$80,000, still within the realm of normal market behaviour.

The path to US$100,000

With Bitcoin only needing a 7.5% increase from its current price to hit US$100,000, historical trends favour a December rally. Past Decembers have been strong for Bitcoin:

• In December 2017, Bitcoin doubled from US$10,000 to US$20,000.
• In December 2020, Bitcoin surged 52%.

However, while the odds are favourable, risks such as over-leverage, macroeconomic factors, or regulatory changes could impact the momentum. Still, Bitcoin’s dominance in the market (nearing 60%) signals strength as it continues to outperform altcoins.

Polymarket, a well-regarded prediction market, gives a 72% chance that Bitcoin will hit US$100,000 before Christmas, echoing the market’s optimistic sentiment. Given these odds, it’s reasonable to expect Bitcoin could break the US$100,000 mark soon.

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