Bitcoin mining stocks have risen alongside the broader market as traders anticipate a less aggressive Fed.

The price of Bitcoin has risen to three-week highs ahead of a highly anticipated CPI report from the United States later this week.

Shares of publicly traded Bitcoin BTC tickers down $17,219 miners surged on Jan. 9 as traders piled into equity markets amid growing bets that the US Federal Reserve will soon be able to ease up on its aggressive anti-inflationary policy.

In intraday trading, bitcoin miners Riot Blockchain (RIOT), Hut8 (HUT), Bitfarms (BITF), Marathon Digital Holdings (MARA), and others posted double-digit percentage gains.

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

Markets rose ahead of the release of the Consumer Price Index for the United States later this week, which is expected to show a continued moderation in cost pressures. On January 7, Labor Department data revealed that job creation and wage growth slowed in December, indicating that the Federal Reserve's rate-hike campaign was having the desired effect.

According to Bloomberg, traders now expect the Fed funds effective rate to peak below 5%, down from 5.06% following the January 6 nonfarm payrolls report. Meanwhile, Fed Fund futures prices indicate that traders anticipate less aggressive rate hikes in the coming months.

In addition to generally favorable market conditions, the rally in Bitcoin mining stocks could be attributed to short covering in a low-liquidity market. Short covering is frequently responsible for the early stages of a rally, as traders square their positions by buying an asset after previously shorting it.

With Bitcoin's price dropping 75% from peak to trough and several crypto firms going bankrupt, the virus has finally spread to the mining sector. Core Scientific, one of the largest Bitcoin miners in terms of computing power, filed for Chapter 11 bankruptcy in Texas in December. Greenridge Mining received a $74 million restructuring lifeline from New York Digital Investment Group the same month.