Bitcoin Rally Reverses on Higher Core Inflation Rates

Thursday's CPI report sparked an initial relief rally in Bitcoin and crypto markets, but it was short-lived.

The headline inflation rate held at 3.4% year-over-year, matching expectations, leading to a brief surge in prices. However, the monthly CPI rose 0.4%, core CPI increased 0.3%, and core services excluding housing jumped 0.5%. This shift in data flipped the market's read on the Federal Reserve.

CoinShares called the report 'not particularly helpful for Bitcoin,' as it raised the odds of continued restrictive monetary policy. The price action reflected this whiplash, with Bitcoin dropping $1,120 in a single minute before reversing and climbing 5% to peak near $79,800 by 10:00 AM. It then slid $2,500 to $77,300 by 11:55 AM.

Rising yields pulled capital away from non-yielding assets like Bitcoin, compressing valuations broadly. The reversal pattern may be a positioning shakeout rather than a fundamental shift, but Bitcoin remains net-negative for 2026 and faces resistance around recent highs.