Bitcoin's 'turning signal' in focus as US manufacturing PMI rebounds… "Possible re-entry into a risk-on phase"

As a US manufacturing gauge returned to expansion territory for the first time in about two years, a potential trend reversal is being discussed in the Bitcoin (BTC) market as well.

According to Cointelegraph on the 2nd (local time), the Institute for Supply Management (ISM) said the January manufacturing Purchasing Managers' Index (PMI) came in at 52.6. That is well above the market consensus of 48.5 and the highest level since August 2022. A PMI reading above 50 indicates the manufacturing economy has entered an expansion phase. The latest reading suggests the end of a manufacturing contraction trend that had persisted for 26 consecutive months.

The ISM manufacturing PMI is regarded as a key indicator the Federal Reserve (Fed) and financial markets use to gauge the strength of the economy, inflation pressures and the direction of monetary policy. Following the release of the strong data, some digital-asset (cryptocurrency) analysts said it could also be a positive signal for Bitcoin's price trajectory. Bitcoin recently fell to the $75,000 range and is currently trading around $78,000.

Looking at historical data, from mid-2020 through 2023, the up-and-down moves in the ISM manufacturing PMI overlapped to a significant extent with Bitcoin's price cycle. Joe Burnett, vice president of Bitcoin strategy at Strive, said, "Historically, a PMI rebound has been a signal of a shift to a risk-on environment," adding that "in 2013, 2016 and 2020, Bitcoin posted strong gains after manufacturing indicators rebounded."

Not all experts agree with an optimistic interpretation, however. Benjamin Cowen of Into The Cryptoverse noted, "Bitcoin does not always move in the same direction as the real economy. There have been cases where Bitcoin set new all-time highs even when the manufacturing PMI was flat or declining."

Meanwhile, Bitcoin has seen heightened volatility since last October's large-scale leveraged liquidation event. The current price is about 38% below the peak from October last year, while gold and equity markets have remained relatively resilient over the same period. Even among institutional investors, 2026 Bitcoin price forecasts vary widely, ranging from $50,000 to $250,000.