Crypto Markets Whipsaw After Softer-Than-Expected U.S. Inflation Data

Thursday’s early rally in crypto markets, fueled by weaker-than-expected U.S. inflation data, quickly reversed, leaving traders frustrated. Bitcoin (BTC) surged to a session high of $89,300 but tumbled to $85,500 within a few hours. At press time, BTC was trading around $86,000, down 0.8% over the past 24 hours. The Nasdaq also gave up gains, falling about 2% from session highs but still maintaining a 1.7% advance.

The initial optimism followed the November Consumer Price Index report, which showed headline inflation dropping to 2.7% from 3% in October. The cooler-than-expected numbers led some to speculate that the Federal Reserve might deliver another rate cut in January—a move generally supportive of risk assets like cryptocurrencies.

However, the data has sparked skepticism. Economist Omair Sharif highlighted that the Bureau of Labor Statistics (BLS) zeroed out rent and owner’s equivalent rent (OER) for October, which could artificially depress year-over-year CPI readings through April unless adjusted. “This is totally inexcusable,” noted WSJ reporter Nick Timiraos. “There is just no world in which this was a good idea.”

Markets appear to agree with the skeptics. Odds of a January rate cut remain low, at around 24%, unchanged from prior estimates.

BTC Rangebound, ETH Traders Hedge

Crypto options activity reflects diverging sentiment between BTC and ether (ETH $2,981.53). Bitcoin options indicate a range-bound outlook, with traders selling downside protection below $85,000 while limiting upside exposure above $100,000. According to Wintermute’s OTC desk, this points to confidence in near-term support and low expectations for a sustained breakout.

Ether options, in contrast, show less conviction and more hedging behavior. Support seems to be forming around $2,700–$2,800, but upside calls above $3,100 are being sold aggressively, suggesting traders are primarily seeking protection against unexpected moves rather than betting on large gains.