US inflation slowed more than expected in November, surprising the markets and potentially altering forecasts for the markets and the US Federal Reserve in the short term. The latest data released on December 18 indicates that the Consumer Price Index (CPI) rose 2.7% year-on-year, significantly lower than the market expectation of 3.1%.
Meanwhile, the core CPI index, which excludes food and energy, rose 2.6% year-on-year, lower than the 3.0% that analysts had expected as well. This data reflects a significant slowdown in price pressures and indicates that the declining inflation environment is gaining more support as we approach the end of 2025.
Is this a positive signal for the crypto market?
This lower-than-expected number confirms the view that inflation is cooling faster than both policymakers and the market had anticipated a few weeks ago. The core inflation that the Fed closely monitors is now below 3%, a level not seen since inflation accelerated earlier in the year.
This information also reduces the rationale for maintaining a tight monetary policy for an extended period and increases expectations that the Fed may begin to ease policy sooner than the market previously assessed.
The market is likely to view this data as a factor supporting interest rate cuts, especially in early 2026, as lower inflation reduces pressure on real yields and the USD, which are two significant obstacles for risky assets in recent times.
Risk asset markets, both stocks and crypto, are taking a cautious stance ahead of this data release, suggesting there is still room for a sharp price adjustment once traders have analyzed the data.
Bitcoin and the broader crypto market are entering the CPI announcement in accumulation mode, as traders prepare for volatility. Lower-than-expected inflation often supports crypto in a macro sense, as the expectation of reduced inflation helps improve liquidity and risk appetite.
The short-term price direction from here will depend on how quickly the market can adjust its Fed policy expectations and whether there will be continued buying after the initial response.
Next steps, attention will shift to:
The probability that the Fed will cut interest rates again
Reaction to the yield of U.S. government bonds
The strength or weakness direction of USD
Response to risky assets until the end of the year
At this time, the November CPI report clearly signals that inflation is decreasing faster than expected, forcing the market to adjust rapidly.
