Disclaimer: This is not financial or investment advice. You are responsible for any capital-related decisions you make, and only you are accountable for the results.

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TLDR:

• The YoY figures come in at 2.6% for Core and 2.7% for Headline inflation.
• The market has moved higher on this print as it emphasises that inflation is less of a risk and the Fed can focus more on the weakening labour market.
• It's now possible that the market prices in more cuts for 2026.
• We remain cautious in the near-term due to unsupportive flows in the Crypto market.
• We maintain a $77k-$82k accumulation zone, with a $70k-$80k BTC representing strong value.

Inflation Data

• Core Inflation YoY: Forecast 3.0%, Actual 2.6%
• Inflation YoY: Forecast 3.0%, Actual 2.7%

Firstly, due to the US government shutdown, we only have the Year-on-Year figures, rather than the Month-on-Month figures.

Expectations going into today's print were for inflation to remain elevated at, or around, the 3.0% YoY figure. However, 2.6% for Headline inflation was a huge downside surprise, and this shifts the markets and the Fed's concerns to the labour market rather than inflation. This should dramatically increase the odds of an interest rate cut at the January 2026 Meeting. However, we've only seen a small increase in the odds of a January cut on Polymarket, going from 22% to 25%.

We're surprised by this, and should we see the labour market data come in softly in early January, then it's very possible that the Fed cuts again at their end of end-of-January meeting, despite pricing suggesting that that's currently unlikely.

Market Reaction:

Going into the print, risk assets had bounced following a 4-day downtrend in the Equity indexes, whilst BTC has bounced back into the mid-$87k's having locally bottomed in the night (at $85k).

Interestingly, pre-print, BTC was at $87,600. Upon the print, price quickly bounced up to $88,200, but it has since settled at $88,000. Honestly, with this kind of inflation print, we'd have expected to see prices move up more. The US market open will now be interesting to watch; we would expect to see positive price action today following this print. It would be really telling of the sentiment in the market currently, should we see the price not move higher today.

Ultimately, this is a print that should be good for risk assets as it allows more Fed cuts next year. We want to see that reaction in prices today, and ideally in tomorrow's end-of-week trading session.

Positioning:

We remain cautious as the flows still aren't hugely supportive, with Long-Term Holders continuing to sell down their coins. However, this is an inflation print that should help risk assets (as it allows for the market to price more rate cuts for next year).

Because of the unsupportive flows, we're still in the camp that price can head down into the $77k-$82k level, and that's where we'd become interested buyers again.

Cryptonary’s Take:

This data allows for more cuts next year, which is positive for BTC. However, with unsupportive flows, and with it likely being the case that we see a lack of risk-taking going into year-end, we still expect prices to chop in the near-term.

What we'd like to see is prices move up in today's US session and also tomorrow's. That would suggest to us that the market is running with this, and we might see the flows improve off the back of this.

For now, we're still cautious, but we're now monitoring this much more closely. We're staying on the view that price can retest $77k-$82k. An invalidation of this would be if the flows improve over the coming days, particularly if the market can hold onto, and run with today's narrative of: prioritising the labour market, rather than inflation, and therefore more cuts in 2026 can come.