(Bloomberg) — The correlation between Bitcoin and a gauge of US technology stocks has hit a two-year high, indicating that the equity market’s response to US inflation data due later Wednesday may set the tone for digital tokens.

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A 30-day correlation coefficient for the biggest cryptocurrency and the Nasdaq 100 Index is at about 0.70, data compiled by Bloomberg show. A reading of 1 indicates assets are moving in lockstep, while minus 1 signals an inverse tie.

The inflation report is anticipated to point out firm price pressures just as markets fret in regards to the Federal Reserve’s scope for further interest-rate cuts amid a strong US economy and uncertainty over the impact of Donald Trump’s agenda.

Bond yields and the dollar have risen against that backdrop, while stocks and crypto have been under pressure. Bitcoin modified hands at $97,000 as of 6 a.m. Wednesday in London, roughly $11,300 below last month’s record high.

Trump Inauguration

President-elect Trump will probably be sworn in on Jan. 20 and should unleash a policy blitz. Speculators are weighing up the danger of inflationary tariff and immigration policies against his pledge to make the US the worldwide home of crypto.

“The general sensitivity to rates of interest over the past month suggests increased importance of Wednesday’s CPI print,” K33 Research analysts Vetle Lunde and David Zimmerman wrote in a note. “Moreover, notable Trump momentum should form in the times leading into the inauguration.”

Hedging activity is picking up in the choices market, signaling that investors are positioning for increased volatility, in response to trading platform Derive.xyz.

The proportion of bearish bets has climbed, pointing to “hedging against potential downside risks as we approach the inauguration,” said Derive.xyz’s Head of Research Sean Dawson.

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