Bitcoin jumped sharply after new U.S. inflation data came in far below expectations, bolstering optimism around further rate cuts from the Federal Reserve.
Specifically, on Dec. 18, 2025, the U.S. Bureau of Labor Statistics released long-delayed November 2025 Consumer Price Index data. The report showed that headline CPI rose 2.7% year over year, well below economists’ forecasts of 3.1% and down from 3.0% in September.
US inflation falls to 2.7%, lower than the expected 3.1%. pic.twitter.com/PPbgivoPcF
— TheCryptoBasic (@thecryptobasic) December 18, 2025
US Inflation Cools
Also, Core CPI, which strips out food and energy, climbed 2.6% year over year, also missing expectations and cooling from previous readings. The 2.6% core CPI reading marked the lowest level since 2021. However, officials did not report any monthly inflation figures, as the shutdown disrupted October data collection entirely.
Housing-related inflation showed signs of slowing. Notably, shelter costs increased only 0.2% between September and November, easing pressure on the overall index. Prices also fell in several categories, including recreation and clothing, which helped pull inflation lower.
However, analysts cautioned that the softer reading did not fully reflect underlying inflation trends. They highlighted timing distortions caused by delayed data collection, which coincided with seasonal discounting tied to the holiday period.
Meanwhile, the CPI report followed closely after a separate U.S. labor update showed unemployment rising to 4.6%, its highest level since September 2021. These trends have fully raised confidence around further rate cuts.
Expert Comments
Speaking on the CPI data, Tom Lee, head of research at Fundstrat, noted that the report was restrained and argued that it bolsters the Federal Reserve’s focus on protecting jobs. He suggested that this stance effectively places a policy safety net under financial markets if economic risks intensify.
Meanwhile, Federal Reserve Chair Jerome Powell stressed that tariffs were the primary driver behind the recent inflation overshoot and said their peak impact should arrive in the first quarter of 2026. Powell asked investors to interpret the CPI report carefully, citing distortions caused by the government shutdown.
However, the data influenced expectations for monetary policy. While traders still see little chance of a January rate cut, the probability of a March cut climbed to around 60%, up from roughly 54%.
Stock futures jumped about 0.5%, and Treasury yields moved lower, creating a risk-friendly environment that often supports risk assets like Bitcoin. Specifically, lower inflation reduces the appeal of yield-based assets and encourages investors to rotate toward higher-risk opportunities.
Bitcoin Spikes Toward $90,000
Following the report, Bitcoin witnessed a rapid spike. Notably, the premier crypto asset gained 1.28% within 15 minutes, with momentum pushing the price to a high of $89,423 roughly 45 minutes later. However, it has since eased slightly to trade around $88,530.
The sudden surge squeezed bearish traders across different crypto assets. Over the past hour, short sellers absorbed losses totaling nearly $67 million, while long liquidations stood at just $4.63 million. Looking at a broader four-hour window, short liquidations climbed to $74.09 million, compared with about $10 million in liquidated long positions.
During the rally, Bitcoin added roughly $40 billion to its market capitalization in just 35 minutes, though it later gave back part of those gains.
While the broader crypto market followed Bitcoin higher, altcoins showed more resilience during the brief pullback. That shift caused Bitcoin’s dominance to slip below 60%, coming barely an hour after market veteran Benjamin Cowen confirmed that dominance had reclaimed the 60% level.
Commenting after the CPI release, the co-founder of Bitcoin2go said Bitcoin responded positively but not explosively, adding that sustained cooling inflation could give the Federal Reserve more room to cut rates more decisively, a scenario that typically favors risk assets like Bitcoin.
👀🔥 WOW: US-Inflation fällt überraschend deutlich auf 2,7%!
Bitcoin reagiert erstmal positiv, reißt jetzt aber auch keine Bäume aus.
Hält der Trend an, gibt es Platz für die FED weiter und deutlicher die Zinsen zu senken. Gut für Risiko-Assets. pic.twitter.com/HohRJloEK1
— Bitcoin2Go (@bitcoin2go) December 18, 2025
DisClamier: This content is informational and should not be considered financial advice. The views expressed in this article may include the author's personal opinions and do not reflect The Crypto Basic opinion. Readers are encouraged to do thorough research before making any investment decisions. The Crypto Basic is not responsible for any financial losses.
