Bitcoin breached the $89,000 mark on Thursday after US inflation data came in well below expectations, before retracing as markets digested the implications of incomplete CPI figures and the recent government shutdown.
Bitcoin Jumps on Cooler US Inflation as Markets Reprice Fed Outlook
18 December 2025 - 14:33 CET
By Sandmark staff
The world’s largest cryptocurrency rose around 1.8% following the release, mirroring a broader risk-on move across digital assets. Ether climbed 2.6%, while BNB gained 1.2%, XRP rose 1.6% and Solana advanced 1.7%, according to TradingView data.
The initial rally followed November consumer price index (CPI) figures showing headline inflation slowing to 2.7% year on year, with core CPI easing to 2.6%. Both figures were well below consensus forecasts, reviving expectations that the Federal Reserve will have greater scope to cut interest rates in 2026.
The headline figure compares with a 3.1% consensus from Trading Economics, with the core CPI expectation at 3.0%.
The data was complicated by the recent US government shutdown, which prevented the Bureau of Labor Statistics from collecting October CPI data. As a result, the November report only offers year-on-year comparisons and two-month changes, rather than a clean monthly read.
Even so, the direction of travel was enough to shift sentiment. Core prices rose just 0.2% over the two months ending in November, restrained by falling costs in areas such as lodging, recreation and apparel.
Fed outlook back in focus
The inflation print reopens the debate over how aggressively the Fed can ease policy next year. While the central bank cut rates earlier this month, officials remain divided over the pace and extent of further cuts in 2026.
As at 14.00 UTC, probability of a 25bp cut at FOMC meeting in Jan is at 28.8% according to CME's FedWatch tool.
Markets have moved more decisively. Following Thursday’s data, traders increased expectations that the Fed will be able to reduce rates further next year without reigniting inflation, pushing up risk assets across the board.
Political pressure is also building. On Wednesday, President Donald Trump said he wanted his eventual choice for Fed chair to pursue “much lower rates” in the future, adding a fresh layer of uncertainty to the policy outlook and reinforcing expectations of a looser stance over the medium term.
