Today’s CPI Report: Is a Major Bitcoin Price Correction Incoming?

Today’s CPI report is in, and for the first time since July 2024, inflation got rekt.

With December’s CPI showing signs of slowdown, inflation hawks are catching a rare glimpse of relief. All eyes now turn to the Federal Reserve as this deceleration reshapes the economic chessboard.

The Consumer Price Index (CPI), which maps out price changes in urban consumer goods and services, remains the go-to barometer for economic inflation.

Everyone can feel that the Bitcoin Price Volume in 24h Price 7d (BTC) price movement is currently manipulated AF.

Yet, like clockwork, Bitcoin pumped 2% on the news, reclaiming $98,000. So where does the Bitcoin price head next?

Core CPI Falls for the First Time in Months

This man would like to raise rates. And seeing as how job growth was stronger than previously expected, markets were betting that Fed Chair Jerome Powell wouldn’t entertain the idea of cutting interest rates.

Now that option is back on the table, markets responded with a sigh of relief.

Stock futures ticked up, and the 10-year Treasury yield fell to under 4.7%, driven by a slight boost in investor confidence. But the Fed’s battle isn’t over—costs for used cars and transportation remain stubbornly high, leaving inflation elevated and unpredictable.

Headline inflation ticked up 2.9% year-over-year in December, edging above November’s 2.7%. It climbed 0.4% monthly, with fuel prices and stubbornly high food costs doing most of the damage.

Energy shot up 2.6%, fueled by a 4.4% spike in gas prices, which made up 40% of the month’s CPI gains.

UK inflation also caught everyone off-guard in December, slipping to 2.5% from November’s 2.6%. That tiny drop—the first in three months—has fueled talk of an interest rate cut on the horizon.

How Will CPI Impact on Federal Reserve Policy?

The inflation report is a mixed bag for the Fed, pointing to slow progress while exposing the grind of hitting its 2% goal.

Morgan Stanley’s Ellen Zentner dubbed the CPI data “dovish,” enough to keep expectations firm for a pause in rate moves this month, putting hawkish chatter on ice.

On the horizon, Donald Trump’s proposed tariffs and tax breaks could further stoke inflation when his policies take effect in 2025.

Optimism for 2025

Oh wait, we said “optimism in 2025!” Credit card debt ain’t that.

However, the credit debt problem shows President Joe Biden left Trump an economic mess.

We’re in a situation where every outcome can be interpreted badly. If CPI is high, the market panics because it assumes interest rates will stay high or even get hiked. If CPI is low, it will scare everyone into thinking economic activity is slow, and the Fed needs to lower rates, but getting the Fed to lower rates is like pulling teeth.

Right now, we’re in the “all news is bad news” phase, but there have been plenty of times we’ve been in the “all news is good news” phase, too.

Trump is the X factor. His first few months in office will determine the Bitcoin price and the direction of the economy.

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