Introduction to CPI and Real Earnings Data
The December Consumer Price Index (CPI) and Real Earnings data were released at 8:30 AM ET, with Bitcoin holding at $92,000 following a recent clash between the Federal Reserve (Fed) and the Department of Justice (DOJ). This data release is crucial as it will provide insight into the current state of inflation and its potential impact on the economy.
Expected CPI and Core CPI
The headline CPI is expected to be 0.3% monthly and 2.7% year-over-year, unchanged from November, while the core CPI is forecast at 0.3% monthly and 2.7% annually, up from 2.6%. Any upside surprise would validate Fed Chair Powell’s caution about sticky inflation and cement the "higher for longer" narrative that sent Bitcoin tumbling from $101,000 to $92,000 after the last Fed decision.
Real Earnings Data and Its Impact
Real Earnings data will show whether wage gains adjusted for inflation continue to support consumer spending. November data showed 0.8% annual growth, which are modest gains that suggest workers aren’t keeping pace with price increases. Analysts warn that data distortions from the government shutdown continue to affect December’s report, with shutdown-related disruptions creating artificially low baselines for goods and rental prices in November.
Market Expectations and Geopolitical Risks
Oxford Economics forecasts headline CPI above consensus at 0.4% monthly, citing technical factors. The timing is critical as markets also digest ongoing geopolitical risks and trade policy uncertainty that could pressure inflation higher through 2026. With Fed rate cut odds for January 28-29 sitting near zero and March looking increasingly uncertain, today’s inflation print could either provide relief if it comes in softer than expected or reinforce the hawkish pivot if it shows acceleration.
Bitcoin’s Technical Setup
Bitcoin’s technical setup remains under pressure, with support critical at $88,000-$90,000 and resistance at $98,000. The total crypto market cap sits at $3.23 trillion as traders await clarity on whether the Fed made a policy error by signaling fewer cuts or correctly assessed that inflation remains too sticky to ease aggressively. A strong CPI above 2.7% YoY would likely pressure Bitcoin toward $88,000, while a surprise downside miss below 2.5% could spark a relief rally back toward $98,000-$100,000.
Conclusion
In conclusion, the December CPI and Real Earnings data releases are crucial in determining the Fed’s next steps and the potential impact on the economy and Bitcoin. Markets are essentially trading the impossible balance: hoping for inflation cool enough to justify cuts, but growth strong enough to avoid recession. As the data continues to unfold, it will be essential to monitor its effects on the crypto market and the overall economy. The reaction of the crypto market to the CPI and Real Earnings data will be a significant indicator of the market’s expectations for future economic growth and inflation.
