As soon as the U.S. December CPI data was released, it immediately fueled expectations for rate cuts! Year-on-year inflation stood at 2.7%, and core inflation rose 2.6% year-on-year—unchanged from November and below expectations. Core monthly inflation increased by only 0.2%, lower than the expected 0.3%, delivering clear signals of cooling inflation.

However, we need to be clear: the November data might have been underestimated due to the government shutdown. December data actually reflects some rebound, and even though inflation has eased, it still hasn't reached the Federal Reserve's 2% target, so there's no room for complacency yet. More interestingly, the current economy is clearly split—GDP appears stable, but the job market has already cooled down. This has sparked fierce debate among Fed officials: one group worries about the labor market's resilience and urges immediate rate cuts, while another argues that inflation hasn't met the target and caution is needed. They're even closely monitoring whether tariffs might be passed on to prices.

Market reaction was quick, traders immediately pushed the betting probability of a rate cut in April to 42%, and financial markets started to jitter as soon as the data came out. I think this data genuinely adds positive momentum for risk assets like Bitcoin, but the Fed will likely drag its feet—after all, inflation isn't under control yet, and there's significant internal disagreement, so they won't ease up easily. The next key will be whether employment data can hold steady; otherwise, with inflation still hanging in the balance and weak jobs data, the Fed’s decision-making will get even more complicated. Bitcoin investors should stay alert and avoid blindly chasing highs!