Bitcoin experienced a brief but significant surge, climbing above $89,000 on Thursday following the release of a U.S. inflation report that indicated a sharper cooling than anticipated. Despite this initial rally, the cryptocurrency quickly pulled back, trading near $88,374 at the time of writing, marking a roughly 2% decrease over the past 24 hours. This positions BTC approximately 2% below its recent seven-day peak of $90,165 and about 4% above its weekly low of $85,374. Bitcoin's current market capitalization stands at an estimated $1.77 trillion, with 19.96 million BTC presently in circulation.

The catalyst for this market movement was fresh Consumer Price Index (CPI) data from the U.S. Bureau of Labor Statistics, which revealed that inflation was decelerating more rapidly than economists had forecasted. The headline CPI registered a 2.7% year-over-year increase in November, notably falling short of the consensus expectation of around 3% and representing a decrease from earlier readings. Furthermore, the core CPI, which excludes volatile food and energy prices, dropped to 2.6%, reaching its lowest point since early 2021. Bitcoin's price reacted almost instantaneously to this data, vaulting from intraday lows near $86,000 to momentarily challenge the psychologically significant $89,000 threshold, according to Bitcoin Magazine pro data.

This upward movement reflected a renewed sense of optimism among investors, suggesting that easing inflation could provide the Federal Reserve with greater flexibility to implement interest rate cuts in 2026. Historically, such an economic backdrop has often been supportive of risk assets, including bitcoin. Data from CME FedWatch indicated that the probability of a rate cut by March slightly increased after the report's publication, though expectations for an earlier January move largely remained subdued.

However, the rally proved to be short-lived. Bitcoin failed to maintain its position above $90,000 decisively and began to recede as the trading session progressed, eventually settling near $88,000. This pattern of sharp, data-driven increases followed by rapid retracements has become a recurring dynamic in the market in recent weeks. Several key headwinds continue to impede sustained growth for bitcoin. Chief among these are the consistent outflows from U.S.-listed spot bitcoin exchange-traded funds (ETFs). While these ETFs were a significant source of demand earlier in the year, they have recently experienced steady net redemptions, thereby diminishing a crucial layer of institutional support that previously helped to absorb selling pressure. Market observers suggest that the absence of consistent ETF inflows has made it more challenging for bitcoin to sustain breakouts, even in the face of positive macroeconomic news.

Beyond inflation, other macroeconomic signals remain mixed. Earlier in the week, delayed U.S. labor market data revealed that unemployment had risen to 4.6%, its highest level since 2021, while job growth continued to be uneven. This data complicates the Federal Reserve’s economic outlook, reinforcing the expectation that policymakers will adopt a cautious approach despite the cooling inflation. Additionally, political uncertainty looms in the background. President Donald Trump has publicly advocated for significantly lower interest rates and has indicated his intention to nominate a Federal Reserve chair who supports more aggressive easing policies. While markets have largely dismissed these comments as political rhetoric, they introduce another variable into an already intricate policy landscape.

From a broader perspective, bitcoin’s price action appears to be characterized by consolidation rather than a clear trend. Despite remaining near historical record highs, price movements have tightened, with a notable resistance level forming just below $90,000. Reports also indicate strong supply above that level from investors who accumulated during previous rallies. Analysts at Bitwise recently published a report suggesting that Bitcoin might deviate from its traditional four-year market cycle, potentially achieving new all-time highs in 2026 while exhibiting reduced volatility and a lower correlation with equities. The Bitwise report contends that Bitcoin's historical four-year cycle, linked to halvings and typically marked by periods of gains followed by pullbacks, may no longer be a reliable indicator. The firm also challenged the long-standing criticism that BTC is excessively volatile for mainstream investors, noting that BTC was less volatile than Nvidia stock throughout 2025, a comparison that, according to Bitwise's Matt Hougan, highlights the asset's ongoing maturation.

At the time of writing, the Bitcoin Fear and Greed Index registered a score of 17/100, signaling a state of 'extreme fear' among market participants. Historically, readings within this range have often corresponded with undervalued market conditions, suggesting a potential contrarian buying opportunity for those prepared to navigate emotional volatility. Just two days prior, the index stood near 11/100, even when the bitcoin price was higher. For now, bitcoin’s reaction to softer inflation underscores its continued sensitivity to macroeconomic data, but its inability to sustain gains above $89,000 indicates that overall conviction remains limited. The bitcoin price at the time of the final update was $88,142.