Bitcoin Eyes CPI Release After Rebound From $85K Support
Bitcoin saw a modest bounce on Wednesday after bulls stepped in to defend the $85,000 support zone. Following the recovery, traders are now turning their attention to tomorrow’s U.S. CPI data, wondering whether the momentum can continue.
Recent Price Action
After hitting an intraday low of $85,427 on Dec. 16, Bitcoin rebounded to around $87,918 during Asian trading hours on Wednesday. It later eased slightly, trading near $87,305 at the time of writing.
The rebound came shortly after U.S. jobs data surprised markets. Nonfarm payrolls rose by 64,000 in November, above economists’ expectations of 45,000, while the unemployment rate ticked up to 4.6% — its highest level since September 2021.
A stronger labor market could give the Fed room to focus on inflation, but rising unemployment may also push the central bank toward future rate cuts. Typically, expectations of Fed easing are bullish for Bitcoin and other major cryptocurrencies.
Short Squeeze Adds Fuel
Bitcoin’s short-term gains were amplified by a short squeeze. CoinGlass data shows around $38 million in short positions were liquidated over the past 24 hours, catching bearish traders off guard.
Eyes on CPI
Investors are now waiting for the U.S. Consumer Price Index report, due Dec. 18 at 8:30 AM ET. Economists expect headline CPI to rise 3.0–3.1% year-over-year, with Core CPI around 2.9–3.1%.
A hotter-than-expected print could lead the Fed to pause planned rate cuts, likely putting downward pressure on Bitcoin.
Conversely, softer inflation could encourage easing, potentially boosting the crypto market.
Other Market Risks
Bitcoin’s short-term outlook also depends on global monetary developments:
The Bank of Japan is expected to raise rates by 25 basis points on Dec. 19. Higher Japanese rates could shrink the yield gap with the U.S., triggering capital shifts and weighing on Bitcoin and altcoins.
Japanese institutions, as major holders of U.S. Treasuries, might repatriate capital, adding further volatility.
Expert Take
David Hernandez, crypto investment specialist at 21Shares, called the jobs report a “mixed signal”:
“The strong payroll number temporarily cools the rally by delaying monetary easing, but the rise in unemployment adds some support. Volatility is expected, yet the long-term narrative for Bitcoin remains intact.”
Bottom Line
While short-term price swings may continue around the CPI release, Bitcoin’s broader outlook is still positive. Traders should prepare for volatility but keep an eye on potential catalysts from U.S. inflation and international rate decisions.
