The overnight CPI data was neutral to slightly positive. Stock index futures rose sharply in the short term. The December CPI annual rate and month-over-month rate were basically in line with expectations at 2.7% and 0.3% respectively. Core CPI annual and month-over-month rates both came in below expectations by 0.1%, at 2.6% and 0.2% respectively.
Although the inflation data did not exceed expectations, it is still decent. Both the annual rate of CPI and core CPI remained unchanged compared to the previous value. The month-over-month core inflation rate was lower than expected, indicating a clear downward trend in inflation. The November inflation was not solely due to the government shutdown. If inflation continues to decline, it will be beneficial for rate cuts in 2026. Of course, even though the December inflation data was favorable, it won't change the Federal Reserve's decision not to cut rates in January. Many people don't understand why the index rose despite the data matching expectations. In previous articles, Lin Chao explained that the crypto market is inherently speculative on expectations. Currently in a bear market phase, as long as the data isn't worse than expected, the market defaults to accepting the result. Any risk-off sentiment had already been priced in earlier, so the news release is essentially a case of bad news being out. Moreover, inflation data being better than expected means the market has already created space for significant rate cuts ahead, naturally making it a positive signal.
That's why we saw yesterday's rise in the crypto market, and Lin Chao suddenly noticed a significant increase in Bitcoin trading volume on Coinbase, while Binance did not show such an increase—indicating that the buying activity is mostly from U.S. investors, and the volume surge occurred during U.S. trading hours. Next, we'll need to look at ETF data. Although today's performance is undoubtedly strong, we must see whether trading volume and ETF inflows continue to grow. If so, it could indeed signal a rising investor preference. However, it's still too early to confirm this trend; more observation is needed, especially since overall monetary and macroeconomic policies have not changed yet.
A7 Summary
The crypto market in January is likely to see an upward trend, but this does not mean the bear market phase will end immediately. The entire crypto market will continue to experience broad-range volatility. Taking BTC as an example, after breaking through the first range at $95,000, a support-resistance reversal has occurred. The price has retraced to the $94,000–$95,000 range as support, extending into a second trading range. We won't see the kind of rapid bull run many hope for. This consolidation and upward trend is expected to continue until the first quarter of 2026. The key turning point lies in the outcome of Trump's visit to China.
The success of investing depends not only on selecting good assets, but also on knowing when to buy and sell. Protecting your principal and maintaining proper asset allocation are essential for steady progress in the ocean of investment. Life is like a river flowing into the sea; what determines victory is never the gain or loss of a single battle or temporary profit or loss, but rather strategic planning before acting and knowing when to stop to achieve lasting gains.