Inflation in the US fell more than expected in November. This was a clear surprise to the downside, which could change market expectations and the Federal Reserve's outlook in the short term. According to new figures from December 18, the total Consumer Price Index (CPI) rose by 2.7% year-on-year, much lower than the market expectation of 3.1%.
Also, the core CPI, excluding food and energy, rose by 2.6% year-on-year, while 3.0% was expected. These figures show that price pressure has been significantly eased and that the movement towards lower inflation is becoming stronger as we approach the end of 2025.
Is this bullish for the crypto market?
The lower numbers than expected reinforce the picture that inflation is falling faster than policymakers and markets thought just recently. Core inflation, which the Federal Reserve closely monitors, is now clearly below 3%, a level we last saw before inflation rose again earlier this year.
These numbers make it less likely that monetary policy will remain tight for an extended period, and increase the chance that the Fed may ease sooner than previously expected.
Markets are likely to view these numbers as favorable for rate cuts, especially for early 2026. Lower inflation leads to less pressure on real yields and the U.S. dollar – two significant headwinds for risky investments in recent months.
Risky markets, such as stocks and crypto, were already cautiously positioned for the numbers. This means there is room for significant price fluctuations now that traders process the new data.
Bitcoin and the broader crypto market entered a consolidation period just before the CPI report, while traders prepared for volatility. A downside inflation surprise is usually a macro advantage for crypto, as lower inflation expectations improve liquidity and increase risk appetite.
Upcoming price movements now depend on how quickly the market adjusts its Fed expectations and whether buyers continue to step in after the initial reaction.
What comes next? Attention shifts to:
Adjusted expectations for Fed rate cuts
Response to the yield on U.S. Treasury bonds
Strength or weakness of the dollar
Movement of risky investments towards the end of the year
For now, the message from the November CPI report is clear: inflation has cooled faster than expected, and the market will need to adapt quickly.
