Finance

Will Inflation Data Trigger a Bitcoin Rally? How the CPI Report Could Reshape Fed Policy and Crypto Markets

U.S. inflation data’s release will influence Bitcoin prices, tied to Fed’s rate cut expectations.

November 12, 2025, 8:50 AM

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Executive Summary

Bitcoin traders are closely monitoring the upcoming U.S. CPI report, which is expected to significantly influence the Federal Reserve’s interest rate policy and the cryptocurrency market.

The probability of a December Fed rate cut has decreased, and a cooler-than-expected inflation print could bolster expectations for a dovish Fed, potentially boosting Bitcoin and other risk assets.

Bitcoin recently experienced a dip due to reduced risk appetite, with its potential rebound contingent on clearer indications of a rate-cut trajectory or expectations of liquidity easing.

The Story So Far

The market is keenly awaiting the U.S. Consumer Price Index (CPI) report, as this inflation data is a primary determinant of the Federal Reserve’s interest rate policy. Expectations of a potential December rate cut, which have recently wavered due to a hawkish Fed stance, significantly influence investor risk appetite, directly impacting the performance of risk assets like Bitcoin.

Why This Matters

The upcoming U.S. inflation data is a critical determinant for the Federal Reserve’s short-term interest rate policy, particularly regarding a potential December rate cut. A cooler-than-expected report could signal a more dovish Fed, potentially weakening the dollar and bolstering risk assets like Bitcoin, which is currently experiencing weak sentiment. Conversely, a hotter report would likely strengthen the dollar, prolonging Bitcoin’s recent losses and dampening investor confidence, thus directly shaping the immediate trajectory of the cryptocurrency market and broader risk asset appetite.

Who Thinks What?

Bitcoin traders and market participants are closely monitoring upcoming U.S. inflation data, viewing the Consumer Price Index (CPI) report as crucial for determining the probability of a Federal Reserve interest rate cut in December and its subsequent impact on Bitcoin’s price.

The Federal Reserve, through Chairman Jerome Powell’s recent hawkish stance, has signaled a less accommodating monetary policy outlook, leading to a decreased probability of a December rate cut according to market data.

Tim Sun, Senior Researcher at HashKey Group, believes the October CPI figure will directly influence how traders price in a potential December rate cut and set the benchmark for short-term market positioning, suggesting that clear indications of a rate-cut trajectory or liquidity easing are needed to restore risk appetite for cryptocurrencies.

Bitcoin traders are closely monitoring upcoming U.S. inflation data, anticipating its potential impact on the Federal Reserve’s interest rate policy and the cryptocurrency market. The latest Consumer Price Index (CPI) report, expected this week, is seen as a crucial signal for market expectations regarding a potential December Fed rate cut, following a period of weak risk appetite for Bitcoin.

Inflation Report to Dictate Fed Sentiment

The October U.S. Consumer Price Index (CPI) report is poised to set the market’s tone, with consensus estimates compiled by FXStreet predicting year-over-year inflation to hold steady at 3%. This report is the first clear inflation signal in weeks, coming after the U.S. government shutdown began 43 days ago.

Tim Sun, Senior Researcher at HashKey Group, highlighted to Decrypt that the October figure, combined with any belated September data, will directly influence how traders price in a potential rate cut in December. He emphasized that these figures will serve as a benchmark for short-term market positioning.

Rate Cut Odds and Market Reactions

The probability of a December rate cut has decreased to 67.9% from 85% just last week, according to FedWatch tool data. This shift reflects Federal Reserve Chairman Jerome Powell’s recent hawkish stance, indicating a less accommodating monetary policy outlook.

A cooler-than-expected inflation print could bolster expectations for a more dovish Federal Reserve, potentially weakening the U.S. dollar and providing a boost to risk assets like Bitcoin. Conversely, a hotter report might strengthen the dollar and prolong Bitcoin’s recent losses, dampening investor confidence.

Bitcoin’s Recent Performance and Outlook

Bitcoin has seen a recent dip, falling 2.7% to approximately $103,600 over the past 24 hours, erasing gains made during Sunday trading, according to CoinGecko data. This decline is attributed to a broad-based reduction in overall risk appetite, as capital has rotated from tech stocks into more stable blue-chip investments amid macro and geopolitical uncertainties.

Sun noted that the market remains constrained by weak sentiment. He suggested that any clear indication of a rate-cut trajectory or expectations of liquidity easing could restore risk appetite, offering direct support for a price rebound across various risk assets, including cryptocurrencies.