Bitcoin $BTC rallied sharply on Thursday, breaking above the $89,000 mark after fresh US inflation data came in well below market expectations. The softer inflation print prompted investors to reassess the Federal Reserve’s policy outlook, triggering a broad risk-on move across global crypto markets.

The world’s largest cryptocurrency gained around 1.8% following the release of the data. The rally extended across major digital assets, with Ether rising 2.6%, BNB $BNB up 1.2%, XRP $XRP climbing 1.6%, and Solana advancing 1.7%, according to TradingView

Inflation Surprise Lifts Market Sentiment

The November Consumer Price Index (CPI) showed headline inflation easing to 2.7% year-on-year, while core CPI slowed to 2.6%. Both readings were significantly below market forecasts, which had pegged headline inflation at 3.1% and core inflation at 3.0%, based on Trading Economics estimates.

The data release came with certain limitations. Due to the recent US government shutdown, the Bureau of Labor Statistics was unable to collect October CPI data. As a result, the November report provided only year-on-year and two-month comparisons, rather than a standard month-on-month reading.

Despite these complications, the overall direction of inflation was enough to boost investor confidence. Core prices rose just 0.2% over the two months ending in November, supported by declining costs in categories such as lodging, recreation and apparel.

Fed Policy Expectations Shift

The softer inflation print has reignited debate over how aggressively the Federal Reserve may ease monetary policy next year. While the central bank delivered a rate cut earlier this month, policymakers remain divided on the pace and scale of further reductions in 2026.

Financial markets, however, have reacted more decisively. Following Thursday’s CPI data, traders increased bets that the Fed will have room to cut rates further next year without reigniting inflationary pressures, driving gains across risk assets, including cryptocurrencies.

Adding to the uncertainty, political pressure on the Fed is also intensifying. On Wednesday, US President Donald Trump stated that he would want his eventual pick for Federal Reserve Chair to pursue “much lower rates” in the future. The comments have reinforced expectations of a looser monetary stance over the medium term.

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