December Consumer Price Index records 2.7%, Bitcoin experiences short-term surge followed by correction

The recently released US December Consumer Price Index (CPI) data met expectations and influenced the cryptocurrency market. The CPI increased by 2.7% year-over-year, remaining at the same level as November, and recorded a monthly increase of 0.3%. Immediately after the data release, Bitcoin temporarily surged to $92,500 but then corrected and is currently trading around $88,050.

US CPI Data and Immediate Market Reaction

The December Consumer Price Index released by the US Bureau of Labor Statistics exactly matched economists’ expectations. The 2.7% year-over-year increase indicates that inflation is stabilizing at the current level. The core CPI, excluding food and energy, rose by 2.6% year-over-year, aligning with consensus forecasts.

Following the CPI data announcement, Bitcoin responded strongly. BTC, which was trading below $92,000 before the official release, temporarily rose to $92,500. However, this surge was not sustained, and it has since corrected to around $88,050, recording a -2.59% decline over the past 24 hours. Immediately after the data was released, US stock index futures rose about 0.3%, and the 10-year Treasury yield decreased from 4.19% to 4.175%.

Federal Reserve Rate Hold Expectation and Inflation Trends

Market participants assess a 95% probability that the Federal Reserve will hold current interest rates at the January meeting. This high likelihood is based on the view that inflation remains within expected ranges. The monthly core inflation rate is estimated at 0.2%, indicating a stable trend.

As clarity around the Fed’s policy direction increases, financial markets are showing relatively consistent reactions. The CPI data not deviating from expectations suggests that inflation control is progressing, which could lead to greater policy stability.

Bitcoin Struggles to Break Resistance Amid Macroeconomic Weakness

Currently, Bitcoin is showing weakness amid various macroeconomic pressures. Analysts suggest that BTC is no longer a macro hedge asset but is trading as a high-beta risk asset. As the market is overwhelmed by the US dollar’s strength and sustained gains in major commodities including gold, Bitcoin has also faced downward pressure.

From a technical perspective, Bitcoin is in a correction phase about 30% below its October highs. It is struggling to break through a key resistance near $89,000. For further upside, market sentiment needs to improve. Major altcoins like Ethereum, Solana, BNB, and Dogecoin have also seen slight gains but are maintaining low trading volumes.

The future direction of Bitcoin is expected to depend on macroeconomic indicators, the persistence of US dollar strength, and signals from the Fed. If key economic indicators like the CPI continue to show stable trends, it could positively influence market sentiment.