Bitcoin jumps and falls fast as U.S. inflation drops to lowest since 2021.
- U.S. inflation fell more than expected, raising hopes for lower interest rates.
- Bitcoin surged past $89,000 before pulling back.
- Traders expect more price swings ahead as the market adjusts.
Bitcoin Reacts to New Inflation Numbers
Bitcoin became very volatile on Thursday. The reason was new data from the U.S. about inflation. The Consumer Price Index (CPI) showed a drop, surprising many analysts. Inflation rose just 2.7% over the past year, down from 3.0% the year before. This was one of the biggest monthly drops since 2023.
This drop makes it more likely that the Federal Reserve will cut interest rates. Lower interest rates often help assets like Bitcoin. Traders responded quickly, pushing Bitcoin above $89,000 for a short time. Then the price reversed and fell again.
Market Sees Chance for Fed Rate Cuts
According to the CME Group’s FedWatch Tool, there’s now a 26.6% chance the Fed will lower interest rates at its next meeting in January. The data shows the 3-month CPI is just above 2%, which is close to the Fed’s goal. This could affect markets for weeks to come.
Crypto trader Daan Crypto Trades said that Bitcoin and other assets are rising because bond yields and the U.S. dollar are falling. Lower bond yields make risky assets more attractive to investors.
Bitcoin Patterns Suggest More Volatility
Traders noticed that Bitcoin’s current price swings look like patterns from earlier this year. Crypto trader Ted Pillows pointed out that the price is following a trend seen in Q1 2025. Back then, Bitcoin dropped below $75,000 before going back up. He suggests something similar might happen again soon.
At the same time, more than $630 million worth of crypto trades were liquidated in the last 24 hours. This shows how unstable the market is. Many traders are unsure about where Bitcoin is going next.
Source: cointelegraph.com
