The December U.S. Consumer Price Index came in largely as expected, with headline inflation rising 0.3% month‑over‑month and 2.7% year‑over‑year. Core CPI was softer at 0.2% MoM and 2.6% YoY. Traders read the release as a tame print, enough to cool worries about further tightening from the Federal Reserve. Treasury yields dipped slightly after the data, while equity futures extended gains.
Crypto Market Reaction
Ethereum surged past $3,300 on Coinbase, its highest level since December 9. Bitcoin also firmed above $72,000, while Solana and Avalanche posted mid‑single‑digit intraday gains.
The move reflects renewed appetite for risk assets as inflation appears contained. Market desks in New York noted heavier retail flows into ETH, with institutional desks citing the CPI release as a trigger for algorithmic buying.
Fed Politics and Market Expectations
Attention now shifts to the Federal Open Market Committee. With Chair Jerome Powell under probe and a leadership change expected within months, traders are questioning the earlier forecast of just one rate cut in 2026. CME FedWatch data shows futures pricing in at least two cuts by year‑end, with probabilities skewing toward a September start. Goldman Sachs analysts flagged the political backdrop as a factor that could accelerate dovish positioning among FOMC members.
Outlook
The combination of contained inflation and looming Fed uncertainty is fueling speculation that risk assets may enjoy a stronger first quarter than initially projected. Ethereum’s breakout above $3,300 is being watched as a technical signal, with resistance near $3,450. For now, the CPI print has bought markets breathing room—and raised the odds that 2026 won’t be a one‑cut year after all.
