The crypto market just got exactly what it needed. January’s CPI inflation data came in cooler than forecast, with headline CPI rising just 2.4% year-over-year versus the 2.5% expected—the lowest reading in nearly four years. Core CPI held steady at 2.5% YoY. The Bitcoin CPI data reaction was swift and bullish, with BTC spiking to $67,500 before settling near $67,000, up over 1% on the day.
January CPI Inflation: Lower Across the Board
Month-over-month CPI registered 0.2%, below the 0.3% consensus. Core MoM matched expectations at 0.3%. This soft print aligns with Wall Street’s hopes for a continued disinflationary trend following December’s hotter readings. Crucially, it brings the annual rate closer to the Fed’s 2% target.
What This Means for Rate Cut Bets
The market’s reaction was immediate. Following the strong jobs report earlier this week, rate cut expectations had been crushed. Now, crypto traders are重新 pricing in more cuts for 2026. This data directly challenges the hawkish stance of Fed officials like Beth Hammack and Lorie Logan, who had signaled support for a pause.
Softer inflation + resilient (but not overheating) labor market = the Goldilocks scenario for risk assets. The dollar softened slightly, and Bitcoin responded accordingly.
My Thoughts
This is the cleanest disinflationary beat we’ve seen in months. The Bitcoin CPI data reaction proves the market was starved for good macro news. We’ve been battered by hot jobs data, hawkish Fed talk, and relentless ETF outflows. This print resets the narrative.
Crucially, it arrives as Bitcoin is already showing signs of basing above $65K. If this data translates into sustained rate cut expectations, we could see institutional flows return aggressively. The next few sessions will tell us if this is a relief bounce or the start of a trend reversal. My bias: this is the macro catalyst the bulls needed.