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Bitcoin traded near $87,300 on Wednesday after rebounding from $85,400 support, with traders positioning ahead of Thursday’s US consumer price index data that could influence the Federal Reserve’s timeline for interest rate cuts in 2025.
Economists expect headline CPI to rise 3.0% to 3.1% year-over-year when the data is released Dec. 18 at 8:30 a.m. ET. A hotter-than-expected print could delay Fed easing and pressure risk assets including Bitcoin, while softer inflation could reinforce the case for rate cuts that have historically supported crypto prices.
Nonfarm payrolls rose by 64,000 in November beating economists’ forecasts of 45,000. However, the unemployment rate climbed to 4.6%, its highest level since September 2021 complicating the macro picture just ahead of the Us cpi data release.
While a resilient labor market gives the Federal Reserve more room to focus on inflation the rising jobless rate has reignited expectations that policymakers may still lean toward additional rate cuts to support employment.
Historically, easing monetary policy and softer inflation trends signaled by Us cpi data tend to be constructive for Bitcoin and the broader crypto market.
Bitcoin’s latest move was also amplified by a short squeeze. According to CoinGlass, roughly $38 million in short positions were liquidated over the past 24 hours compared with $23.5 million in long liquidations adding fuel to the bounce ahead of the Us cpi data event.
Investors are now squarely focused on the Us cpi data set for release on Dec. 18 at 8:30 a.m. ET. Economists expect headline CPI to rise to between 3.0% and 3.1% year on year, while core CPI is projected to come in around 2.9% to 3.1%. Any upside surprise in the Us cpi data could reinforce concerns that inflation remains sticky.
A hotter than expected Us cpi data print could prompt the Federal Reserve to pause or delay rate cuts in early 2026 potentially putting near term pressure on Bitcoin. Fed Chair Jerome Powell has already hinted at a more cautious policy outlook underscoring the importance of incoming inflation readings such as the Us cpi data.
Beyond U.S. inflation, global macro risks are also weighing on sentiment. Markets are closely watching the upcoming Bank of Japan interest rate decision due on Friday. Data from Polymarket suggests a 98% probability of a 25 basis point hike which would lift Japan’s benchmark rate to 0.25% for the first time in over 11 months.
If the BoJ hikes rates while the Fed moves toward easing following softer Us cpi data, the narrowing yield differential could trigger an unwinding of the yen carry trade.
Japanese institutional investors among the largest foreign holders of U.S. Treasuries may repatriate capital, a dynamic that has historically pressured Bitcoin and altcoins during past BoJ tightening cycles.
“The unexpected strength in the November jobs report presents a short term headwind for Bitcoin,” said David Hernandez, crypto investment specialist at 21Shares, in comments to crypto.news.
“However, the rise in the unemployment rate creates a mixed signal. While volatility around the Us cpi data is likely the long term narrative for Bitcoin remains intact.”
Hernandez added that the strong payrolls figure may temporarily cool the rally by delaying monetary easing but emphasized that macro uncertainty tied to the Us cpi data represents a tactical challenge rather than a structural threat to Bitcoin’s broader bull case.
