Bitcoin price volatility increases after CPI announcement, coinciding with interest rate cut prospects

Recent US Consumer Price Index (CPI) releases have introduced a new variable into the cryptocurrency market. Since the CPI announcement, digital assets including Bitcoin have been on high alert, and experts are analyzing that the increased likelihood of interest rate cuts in the future could reignite interest in cryptocurrencies. Currently, Bitcoin’s price is fluctuating around $88,010, down 2.16% over the past 24 hours.

CPI Release Below Expectations Strengthens Rate Cut Signals

The CPI release sent an important signal to the market. US December inflation stabilized at an expected 2.7%, and notably, the core CPI, which experts are paying close attention to, was announced lower than forecasted. Matt Mena, a cryptocurrency strategist at 21Shares, commented, “The CPI report released this morning provides a clear benchmark to dispel the fog of uncertainty that has persisted since the end of 2025.”

This positive CPI news supports the Federal Reserve’s ‘soft landing’ scenario and increases the likelihood of additional rate cuts this year. Rate cuts tend to decrease the appeal of cash assets and increase demand for risk assets like Bitcoin. However, contrary to market expectations, the probability of rate cuts this year remains low. According to the prediction market Polymarket, the chance of a 25 basis point rate cut this year is 3.6%, and Kalse data shows about 5%.

Bitcoin, Reattempting Long-Standing Resistance

Immediately after the CPI release, Bitcoin attempted to break through the $93,500 level, but the current price has fallen to $88,010. This indicates that breaking through the resistance zone of $93,500–$95,000, which Bitcoin has faced for nearly two months, remains challenging. This zone acts as a technical resistance level and a significant psychological barrier among investors.

Mena pointed out, “If Bitcoin clearly breaks through this resistance, it could set the stage for a challenge to $100,000 by the end of the month.” Currently, Ethereum is trading around $2,930, down 3.28% in 24 hours, and BNB has recorded a decline of over 1.5%. The CoinDesk 20 (CD20) index, representing the broad cryptocurrency market, also declined about 1.4% during the same period.

Political Tensions, Policy Changes, and Growing Market Uncertainty

Bitcoin price fluctuations are influenced not only by macroeconomic signals but also by political uncertainties. Tensions between President Donald Trump and Federal Reserve Chair Jerome Powell are intensifying, and political noise related to investigations by the Department of Justice is affecting market sentiment. These political tensions raise questions about the independence of the Fed and impact policy decision trustworthiness.

Meanwhile, the ongoing draft of the Digital Asset Market Structure Bill in the Senate is also noteworthy. The latest draft includes compromises on stablecoin yields and protections for some decentralized finance (DeFi) activities. Mena analyzed that if this bill passes, “it could serve as a potential positive catalyst for cryptocurrencies by providing approval stamps for institutional capital.” Additionally, a Supreme Court ruling on federal tariff authority is upcoming, which could influence the dollar and risk assets.

Gold and Bitcoin ‘Store of Value’ Competition, Bitcoin Falling Behind

Interestingly, contrary to expectations, Bitcoin is lagging behind gold as a store of value. Gold prices have surged past $5,500 per ounce, signaling extreme optimism. JM Bullion’s Gold Fear & Greed Index indicates an extreme level of optimism for precious metals, while the same index applied to cryptocurrencies remains in fear territory.

As Mena pointed out, “Despite the ‘real asset’ narrative, Bitcoin is being traded like a high-beta risk asset.” The tendency of investors seeking a store of value to prefer physical gold and silver over digital tokens suggests a shift in market psychology and asset allocation preferences.

Market Outlook Post-CPI Release, Reassessing the $100,000 Possibility

Despite Bitcoin’s weakness immediately after the CPI release, experts believe the situation could change depending on upcoming economic indicators. Mena stated, “If upcoming retail sales and housing data demonstrate consumer resilience, we could see a clear breakthrough of the $93,500–$95,000 resistance zone.”

Breaking through this level could pave the way for a challenge to $100,000 by the end of the month and potentially lead to a new all-time high within this quarter. However, in the current environment, positive signals from the CPI are limited in influence by technical resistance and political uncertainties, and Bitcoin’s market is navigating a complex interplay of macroeconomic policies, political factors, and technical psychology to find direction.