CPI Data Ignites Rate Cut Expectations. Bitcoin Surges to Two-Month High, Crypto Market Rallies Across the Board

TradingKey - CPI data boosted expectations for future Fed rate cuts, stimulating Bitcoin prices to break through key resistance levels, with a bullish signal currently forming.

On Wednesday (January 14), U.S. December CPI data ignited bullish market sentiment, driving a broad rally in cryptocurrencies. Among them, Bitcoin ( BTC) surged over 4%, while Ethereum ( ETH) skyrocketed nearly 7%, Ripple ( XRP) rose over 5%, and other major coins also saw various degrees of gains.

[Price changes of the top ten cryptocurrencies by market cap, Source: CoinMarketCap]

Data released by the U.S. Bureau of Labor Statistics showed that the December 2025 CPI rose 2.7% year-on-year, unchanged from the previous month and in line with expectations, while the core CPI rose 2.6% year-on-year, slightly lower than the market expectation of 2.7%.

In the view of the "Fed whisperer," the December CPI data is unlikely to change expectations for holding interest rates steady in January. However, the December CPI is conducive to boosting expectations for subsequent rate cuts. According to the latest data, following the release of the CPI data, the probability of a Fed rate cut in April has risen from 38% to 42%.

President Trump was relatively satisfied with the current inflation data and stated that Powell should cut interest rates significantly. This is not the first time Trump has made demands of Powell, which have consistently gone unmet. Last week, the U.S. Department of Justice served a subpoena to the Federal Reserve, initiating criminal charges against Powell over cost overruns for the renovation of the Fed's headquarters building, further escalating the conflict between Powell and Trump.

Currently, Powell has yet to back down before Trump, fueling Trump's determination to remove him from office early. Procedurally, Powell's term as Chairman expires this May, but his term as a Governor continues until 2028, which still poses a threat to Trump's goal of significantly lowering interest rates.

Trump favors aggressive rate cuts while Powell remains relatively steady; the conflict between the two creates significant uncertainty regarding rate cuts and the future trajectory of the crypto market. Nevertheless, Bitcoin prices have currently broken through the short-term resistance level of $95,000, reaching a new high since November 2025, forming bullish momentum.

[Bitcoin price chart, Source: TradingView]

Furthermore, SEC Chairman Paul Atkins stated in an interview with Fox Business this Monday that he is confident that the crypto market structure bill will be sent to President Trump for signing this year. The bill's original intent is to provide clear regulation and support Trump's goal of "making America the crypto capital," which serves as a significant and non-negligible tailwind for the entire crypto market.