Bitcoin mining stocks surge alongside the broader market as investors anticipate a less aggressive Federal Reserve.

In anticipation of a highly anticipated U.S. CPI report later this week, the BTC price reached its highest level in three weeks.

Shares of publicly traded Bitcoin BTC tickers down $17,219 miners surged on January 9 as traders flocked to equity markets in anticipation that the Federal Reserve of the United States will soon be able to ease its aggressive fight against inflation.

During intraday trading, Bitcoin mining stocks Riot Blockchain (RIOT), Hut8 (HUT), Bitfarms (BITF), Marathon Digital Holdings (MARA), and others posted double-digit percentage gains.

The rally coincided with a broad uptick in equity markets, with the large-cap S&P 500 Index increasing by 1% and the technology-focused Nasdaq increasing by 2% before paring gains.

The U.S. Consumer Price Index report due out later this week is anticipated to show a continuation of the moderation in price pressures. The Labor Department reported on January 7 that job creation and wage growth slowed in December, indicating that the Federal Reserve's campaign to raise interest rates was having the desired effect.

Bloomberg reports that swap contracts indicate traders now expect the Fed funds effective rate to peak below 5%, down from 5.06% following the release of the nonfarm payrolls report on January 6. In the meantime, Fed Fund futures prices indicate that investors anticipate less aggressive rate hikes in the coming months.

In addition to generally favorable market conditions, the Bitcoin mining stock rally may also be due to short covering in a market with low liquidity. Frequently, the initial stages of a rally are caused by traders covering their short positions by purchasing the asset they had previously sold short.

With Bitcoin's price falling 75% from peak to trough and a number of crypto firms filing for bankruptcy, the contagion has begun to spread to the mining industry. In December, one of the largest Bitcoin miners by computing power, Core Scientific, filed for Chapter 11 bankruptcy in Texas. New York Digital Investment Group provided a $74 million restructuring lifeline to the mining company Greenridge in the same month.