Bitcoin Rallies Towards $90K as US Inflation Data Surprises with Lower Readings

Summary: Bitcoin surged sharply following the release of U.S. inflation data that came in significantly below expectations, increasing optimism about potential rate cuts by the Federal Reserve.

Key Takeaways

Bitcoin experienced a rapid increase after November's Consumer Price Index (CPI) showed inflation at 2.7%, lower than the expected 3.1%.
Core CPI also fell short of predictions, landing at 2.6%, the lowest since 2021.
Lower inflation figures have led to a growing sentiment that the Federal Reserve may consider cutting interest rates in March.
Following the CPI report, Bitcoin's price briefly rose to $89,423, significantly impacting the broader cryptocurrency market.

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U.S. Inflation Tends to Cool Down

On December 18, 2025, the U.S. Bureau of Labor Statistics released the long-awaited CPI data for November, revealing that the year-over-year headline inflation rate rose to 2.7%. This result was notably lower than the economists' forecast of 3.1% and down from 3.0% in September.

US inflation information Chart

Core CPI, which excludes food and energy costs, registered a 2.6% increase year-over-year, missing expectations and marking the lowest rate since 2021. While officials did not report monthly inflation figures due to a shutdown affecting data collection, reports indicated a slowdown in housing-related inflation. Specifically, shelter costs rose only 0.2% between September and November, alleviating pressure on the overall index. Price declines in areas such as recreation and clothing also contributed to the reduced inflation rate.

However, analysts cautioned that this softer reading might not fully represent underlying inflation trends, noting timing distortions due to the government shutdown and seasonal holiday discounts. Additionally, the CPI figures came just after a labor update indicated that unemployment had risen to 4.6%, the highest level since September 2021. These developments have raised confidence in the possibility of further rate cuts from the Federal Reserve.

Insights from Experts

Tom Lee, head of research at Fundstrat, commented on the CPI data, emphasizing that the restrained nature of the report supports the Federal Reserve’s commitment to job protection. He mentioned that this approach effectively provides a safety net for financial markets in case economic risks become more pronounced.

Federal Reserve Chair Jerome Powell remarked that tariffs played a significant role in the recent inflation rise, predicting that their peak impact would occur during the first quarter of 2026. Powell advised investors to interpret the CPI report carefully, recognizing the distortions due to the government shutdown.

Despite traders seeing a slim chance of a rate cut in January, expectations for a cut in March have risen to about 60%, up from roughly 54%. Following the report, stock futures jumped approximately 0.5%, and Treasury yields declined, enhancing a risk-friendly environment that typically benefits risk assets like Bitcoin. Lower inflation leads to reduced allure for yield-based investments, prompting investors to shift towards higher-risk opportunities.

Bitcoin Approaches $90,000

In the wake of the CPI report, Bitcoin experienced a significant price surge. The leading cryptocurrency gained 1.28% in just 15 minutes, reaching a high of $89,423 approximately 45 minutes later. Since then, its price has slightly retreated to around $88,530.

This sharp rise resulted in substantial losses for bearish traders across various crypto assets, with short sellers incurring nearly $67 million in losses within the hour, while long liquidations totaled only $4.63 million. Over a broader four-hour span, short liquidations soared to $74.09 million, compared to roughly $10 million in long position liquidations.

During the rally, Bitcoin's market capitalization increased by approximately $40 billion in just 35 minutes, although it subsequently gave back some gains. The overall cryptocurrency market followed Bitcoin’s lead upward, with altcoins demonstrating resilience during the brief price pullback. This shift caused Bitcoin’s market dominance to dip below 60%, despite market veteran Benjamin Cowen confirming earlier that it had just reclaimed that level.

Post-CPI release, the co-founder of Bitcoin2go noted Bitcoin's positive but not explosive reaction, stating that sustained cooling inflation could enable the Federal Reserve to implement more decisive rate cuts, a scenario that typically benefits risk assets like Bitcoin.

Disclaimer: This content is for informational purposes only and should not be regarded as financial advice. The opinions expressed in this article may represent the author's personal views and do not reflect those of The Crypto Basic. Readers should conduct their own research prior to making investment decisions. The Crypto Basic holds no responsibility for any financial losses incurred.