Bitcoin showed signs of stability on Wednesday after buyers stepped in to defend the key $85,000 level, sparking a modest rebound. The move has now shifted market attention to a crucial macro event: the upcoming U.S. Consumer Price Index (CPI) report scheduled for Dec. 18 at 8:30 AM ET. The big question is whether fresh inflation data will fuel another leg higher—or put pressure back on the market.
After sliding to an intraday low of $85,427 on Dec. 16, Bitcoin bounced sharply, climbing to a high of $87,918 during Asian trading hours. At the time of writing, the world’s largest cryptocurrency was trading near $87,305, trimming some of its earlier gains.
The rebound came shortly after the release of the latest U.S. jobs data, which surprised to the upside. Nonfarm payrolls rose by 64,000 in November, well above economists’ expectations of 45,000. At the same time, the U.S. unemployment rate climbed to 4.6%, marking its highest level since September 2021.
This mixed labor market picture has left investors divided. A strong jobs number gives the Federal Reserve more room to stay focused on inflation, but the rising unemployment rate raises concerns about economic momentum. Some analysts believe this could eventually push the Fed toward additional rate cuts as it balances inflation control with its employment mandate. Historically, expectations of lower interest rates have been supportive for Bitcoin and other risk assets.
Bitcoin’s short-term jump was also amplified by derivatives market activity. According to data from CoinGlass, roughly $38 million worth of short positions were liquidated over the past 24 hours, compared to $23.5 million in long liquidations. This suggests that a brief short squeeze helped accelerate the rebound as bearish traders were caught off guard.
Looking ahead, the CPI report is now the main catalyst on traders’ radar. Economists expect headline inflation to come in between 3.0% and 3.1% year-over-year, while Core CPI is forecast in the 2.9% to 3.1% range. A hotter-than-expected reading could prompt the Fed to pause rate cuts as early as January, potentially weighing on Bitcoin prices.
Adding to the uncertainty is the Bank of Japan’s interest rate decision due on Friday, Dec. 19. Polymarket data shows markets pricing in a 98% chance of a 25 basis point hike, which would push Japan’s benchmark rate to 0.25% for the first time in over 11 months. With Japanese inflation still above 2%, a hike could have global ripple effects.
If Japan raises rates while the U.S. moves toward easing, the narrowing yield gap could trigger an unwinding of the yen carry trade. Japanese institutional investors—among the largest foreign holders of U.S. Treasuries—may also repatriate capital, selling U.S. assets in favor of higher-yielding domestic bonds. Historically, Bitcoin and many altcoins have seen sharp pullbacks following Bank of Japan rate hikes.
Commenting on the situation, David Hernandez, crypto investment specialist at 21Shares, noted that the strong jobs report poses short-term challenges for Bitcoin. However, he emphasized that the rise in unemployment sends a mixed signal and doesn’t undermine Bitcoin’s longer-term outlook. According to Hernandez, current volatility reflects a tactical hurdle rather than a fundamental shift in Bitcoin’s broader narrative.
Also Read: BitMine Boosts ETH Holdings, Bets Big on $20K Ethereum Future
