U.S. inflation data improves, driving BTC rebound above $90,000

The recent cryptocurrency market has shown an independent trend, with improved US inflation expectations becoming the main driving force behind the price rally. Bitcoin has retaken the $90,000 level, and Ethereum has also stabilized above $3,000, reflecting new market expectations for a policy shift by the Federal Reserve. According to the latest data, BTC is currently quoted at $90.36K, up 0.64% in the past 24 hours, while ETH is at $3.04K, up 1.28% over the same period.

US Inflation Data Below Expectations, Changing Market Rate Expectations

The US announced core CPI figures below market expectations, igniting a rebound in the crypto market. This data release reversed last week’s bearish sentiment, with the market anticipating that inflationary pressures may not be as severe as previously feared. Due to the improvement in US inflation data, traders are re-evaluating the Federal Reserve’s policy path, and expectations that interest rates will remain unchanged in January have also wavered. This shift in expectations directly propelled the rise in crypto asset prices.

Inflation data has far-reaching implications for central bank policies. When US inflation is below expectations, the Fed may face increased pressure to maintain low interest rates, which is positive for risk assets like Bitcoin. The market believes that a lower interest rate environment will enhance the attractiveness of alternative assets, leading to a clear rebound in cryptocurrencies.

Independent Market Trends Emerge, BTC and US Stocks Diverge

It is worth noting that the crypto market’s rebound contrasts sharply with the trend in US stocks. While US equities generally declined, BTC moved upward against the trend, reflecting different driving logic in the two markets. After consecutive days of new highs, US stocks experienced a correction, which is a normal technical adjustment, but cryptocurrencies rebounded independently due to improved inflation expectations.

The core logic behind this divergence is that markets tend to adjust after extreme movements. When US stocks rise too much, they need to fall back; when cryptocurrencies fall too much, they tend to rebound. Both corrections and rebounds follow the same market principles. However, the immediate cause of the US stock decline was the escalation of geopolitical risks.

Geopolitical Tensions Rise, Market Volatility Factors Increase

The Iran situation has recently become a new focus for global markets. US officials publicly stated support for Iranian opposition protesters, sparking concerns about escalating geopolitical conflicts. Crypto markets reacted faster than US stocks, adjusting earlier, indicating that markets are pricing in potential war risks in advance.

Looking ahead, the US will release another key inflation indicator—the Producer Price Index (PPI)—and several Federal Reserve officials will also make policy statements. These events could trigger further market volatility. Although the improvement in US inflation data has supported the recent rebound, if the Iran situation escalates further or the US or Israel confirms military action, even the crypto market may face downward pressure.

However, once geopolitical tensions become clearer, markets typically experience a new round of rebounds. The current period of volatility is a critical window for investors paying attention to market trends—full of opportunities but requiring cautious management. The interaction between US inflation prospects and geopolitical risks will be the main factors influencing the crypto market direction in the coming period.