Bitcoin and crypto rally as ISM manufacturing index hits two-year high

An important gauge measuring America’s factory sector just reached its strongest level in more than two years, and some cryptocurrency watchers believe this could mean better days ahead for Bitcoin, which currently sits around $78,000.

The Institute for Supply Management released numbers on Monday showing its Manufacturing Purchasing Managers’ Index climbed to 52.6 in January. That number crushed expectations, which had been hovering near 48.5, and marked the first time in over two years that the manufacturing sector showed growth instead of decline. The last 26 months had all registered contraction.

Analysts see potential Bitcoin turnaround

Investors and the Federal Reserve pay close attention to this measurement when making decisions about the economy’s direction, inflation concerns, and interest rate policies. When the number crosses above 50, it means factories are expanding. Below 50 signals they’re pulling back. The manufacturing index hasn’t been this high since August 2022.

People who follow Bitcoin think this strong factory number might help the digital currency bounce back after it dropped to $75,442 on Monday, its lowest point in 10 months.

Looking at past trends, the manufacturing index and Bitcoin’s price moved together quite closely between mid-2020 and 2023. When one went up or down, the other often followed.

Joe Burnett, who works as vice president of Bitcoin strategy at Strive, said that “Historically, these PMI reversals mark the shift to risk-on conditions.” He pointed out that Bitcoin jumped higher when the manufacturing index improved in 2013, 2016, and 2020.

Another Bitcoin watcher using the name Plan C added: “If you don’t upgrade your understanding of the Bitcoin cycle from the 4-year halving mirage mindset to a business cycle / macro mindset fast… You will miss the boat completely on the second massive leg of this Bitcoin bull market!”

However, Benjamin Cowen, who runs Into The Cryptoverse, noted that the connection between Bitcoin and manufacturing doesn’t always hold up, saying that “Bitcoin is not the economy.” Last year provided a clear example of this disconnect. While the manufacturing index stayed weak or flat for several months, Bitcoin kept climbing toward its peak of $126,080.

Rough stretch for cryptocurrency markets

Bitcoin has gone through a rough patch recently. On Oct. 10, a major shakeout hit cryptocurrency markets when more than $19 billion worth of leveraged positions got wiped out suddenly.

Since hitting its October peak, Bitcoin has fallen nearly 38% to its current price. During this same stretch, gold and stocks have mostly moved upward, leaving Bitcoin investors feeling discouraged.

Wall Street firms can’t agree on where Bitcoin goes from here in 2026. Dragonfly, a cryptocurrency investment firm, predicted in its yearly outlook that Bitcoin will trade above $150,000 by year’s end. Tom Lee from Fundstrat took a different view on Jan. 20, saying he expects Bitcoin would retrace further before rallying late in the year to set a new record.

Galaxy Digital decided not to make any prediction at all. The firm said 2026 would be “too chaotic” to call, suggesting Bitcoin could finish anywhere between $50,000 and $250,000.

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