Cooling US Inflation, Stable Jobs and Gradual Liquidity Boost: What It Means for Bitcoin
US headline CPI eased to 2.4% year‑on‑year in January (from 2.7%), with monthly CPI up 0.2%. Core CPI rose 0.3% month‑on‑month and remains 2.5% YoY; services inflation is sticky at 3.2% YoY. Nonfarm payrolls increased by 130,000 and unemployment is 4.3%; annual wage growth is 3.7%. Retail sales softened (flat in December), indicating consumer demand cooling despite steady employment. The Fed has shifted from balance‑sheet runoff to measured expansion to restore reserve levels—an operational liquidity increase rather than aggressive easing. Markets price a higher chance of rate cuts later in the year but the Fed remains cautious given services inflation and labour resilience. For crypto, marginal liquidity improvements and higher odds of easing have supported risk assets tactically, helping bitcoin rallies driven largely by short squeezes and spot buying. However, persistent spot distribution, on‑chain signals (adjusted SOPR around 0.92–0.94) and a decline in futures open interest during the rally imply the advance was largely forced (short covering) and structural demand is still uncertain. Conclusion: expect tactical upside and volatility, but a durable bullish cycle for bitcoin requires clearer disinflation in services or sustained spot demand alongside continued liquidity expansion.
Neutral
The report outlines a mixed macro picture: headline inflation is easing (2.4% YoY) and liquidity is incrementally returning as the Fed expands its balance sheet, both of which are typically supportive for risk assets like bitcoin. Markets also price greater odds of rate cuts later in the year, supplying tactical tailwinds. However, persistent services inflation (3.2% YoY), steady employment and firm wage growth limit the Fed’s ability to pivot quickly to aggressive easing. Crypto‑specific signals are ambiguous: the recent ~9% bitcoin rise after CPI was driven largely by short squeezes and reduced open interest, not clear fresh long demand, while on‑chain metrics (adjusted SOPR ~0.92–0.94) show loss realisation consistent with structural fragility. Historically, measured liquidity expansion and easing expectations can be bullish for scarce digital assets, but only when paired with sustained spot accumulation (e.g., past bull phases after decisive Fed easing or large-scale institutional accumulation). Given the combination—incremental liquidity and conditional rate odds vs sticky services inflation and ongoing spot distribution—the immediate outlook supports tactical rallies and reduced systemic tail‑risk but does not confirm a durable bull cycle. Therefore the impact is classified as neutral: likely increased short‑term volatility with episodic upside, but no assured long‑term breakout until macro disinflation and persistent spot demand are evident.