Bitcoin Seeks Liquidity as US CPI Inflation Hits Lowest Since 2021

Bitcoin surged to $89K after US CPI inflation hit 2.7%, its lowest since 2021, sparking volatility and market liquidations.

Bitcoin faced increased volatility following the release of the US Consumer Price Index (CPI) for November. The CPI came in at 2.7% year-over-year, its lowest level since March 2021. 

As a result, Bitcoin’s price surged to nearly $89,500 before falling back. The unexpected CPI drop has raised questions about future market trends, especially for risk assets like Bitcoin.

US CPI Data and Its Effect on Bitcoin

The US Bureau of Labor Statistics reported a 2.7% rise in the CPI for the year ending November. This was lower than the anticipated 3.1% increase. 

It marks a significant shift from previous months, offering hope that inflation may be slowing. Bitcoin traders reacted quickly, with the cryptocurrency rising to over $89,000 before correcting.

Many market observers believe that the data could lead to further interest rate cuts by the Federal Reserve. 

Daan Crypto Trades, a crypto trader, mentioned that the drop in inflation could lower bond yields and the dollar. These factors contributed to Bitcoin’s rally. The likelihood of more rate cuts has sparked renewed interest in risk assets like Bitcoin.

Core CPI is now at its lowest point since 2021 after missing to the downside by a massive amount.

Risk assets like $BTC are rallying on the back of this, combined with a large fall in the dollar and bond yields.

The 3 month annualized CPI is now just slightly over 2%. This… pic.twitter.com/bKcLDiJuWQ

— Daan Crypto Trades (@DaanCrypto) December 18, 2025

Despite the positive CPI report, Bitcoin’s price action remains erratic. 

Traders have been cautious due to the unpredictable nature of the cryptocurrency market. Some believe that the market could continue to experience sharp price movements in the coming weeks.

Liquidity Issues in Bitcoin’s Price Movement

Bitcoin’s recent price action has raised concerns over liquidity. The cryptocurrency has faced several price reversals despite reaching highs of nearly $89,500. These sudden price moves are often followed by sharp corrections, suggesting a lack of consistent buying power at higher levels.

In the past 24 hours, liquidations in the crypto market totaled over $630 million. This suggests that many traders were caught off guard by Bitcoin’s volatility. 

These massive liquidations indicate that the market may be struggling with liquidity issues. As a result, Bitcoin’s price remains unpredictable in the short term.

The sudden price swings have led some traders to question whether the market is being manipulated. 

Liquidity walls above and below key price levels have made it difficult for Bitcoin to maintain a steady trend. These factors are contributing to the heightened volatility seen in the market.

Related Reading: Bitcoin Long-Term Holders Break Pattern: $85K or $91K?

Bitcoin’s Price Action Mimics Early 2025 Trends

Some traders have drawn comparisons between Bitcoin’s current price movements and those from earlier in 2025. 

Crypto trader Ted Pillows pointed out that Bitcoin’s behavior in recent days mirrors the price action seen in early April. This suggests that Bitcoin may be approaching another macro bottom before potentially recovering.

$BTC is mimicking the Q1 2025 fractal.

What if this plays out? pic.twitter.com/s7et7s8LdV

— Ted (@TedPillows) December 18, 2025

Despite the positive CPI data, Bitcoin’s price remains unpredictable. 

Traders are watching closely for any signs of sustained upward momentum. However, the recent erratic movements have led many to believe that Bitcoin could revisit lower price levels before making a more significant move.

The volatility is expected to continue, as the market adjusts to new inflation data and potential Federal Reserve actions. Bitcoin’s future price movements will depend largely on how inflation trends and interest rate expectations evolve.

As always, uncertainty remains a key factor in the crypto market’s behavior.