As traders expect the Fed to be less aggressive, Bitcoin mining stocks rise along with the rest of the market.

Before a highly anticipated U.S. CPI report later this week, the price of BTC rose to its highest level in three weeks.

Shares of publicly traded Bitcoin BTC tickers down $17,219 miners went up on Jan. 9 as traders rushed into the stock market because more and more people were betting that the US Federal Reserve would soon be able to stop fighting inflation so hard.

During intraday trading, Bitcoin miners Riot Blockchain (RIOT), Hut8 (HUT), Bitfarms (BITF), Marathon Digital Holdings (MARA), and others all saw gains of more than 10%.

The rally happened at the same time that most stock markets were going up. The large-cap S&P 500 Index went up 1% and the tech-focused Nasdaq went up 2% before reversing its gains.

The markets went up before this week's much-anticipated U.S. Consumer Price Index report, which is expected to show that price pressures are continuing to ease. The Labor Department's data from January 7 showed that job creation and wage growth slowed down in December. This suggests that the Federal Reserve's campaign to raise interest rates was having the effect it was meant to have.

According to Bloomberg, swap contracts show that traders now expect the Fed funds effective rate to peak below 5%, down from 5.06% after the Jan. 6 nonfarm payrolls report. Fed Fund futures prices, on the other hand, show that traders think interest rates will be raised less quickly in the coming months.

In addition to generally good market conditions, the rally in Bitcoin mining stocks may also be due to short covering in a market with low liquidity. Most of the time, the beginning of a rally is caused by traders buying an asset they had been shorting in order to close their positions.

Since the price of Bitcoin has dropped 75% from its high to its low and several crypto companies have gone bankrupt, the virus has finally started to spread to the mining sector. Core Scientific, which was one of the most powerful BTC miners, filed for Chapter 11 bankruptcy in Texas in December. In the same month, New York Digital Investment Group gave the mining company Greenridge $74 million to help it restructure.

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