MICA Daily｜CPI far below expectations boosts the market, but the crypto market experiences a double kill of bulls and bears

Last night’s key event was the US公布 Consumer Price Index (CPI) annual increase rate of 2.7%, lower than the market expectation of 3.1%. Core inflation dropped to the lowest level since early 2021, unexpectedly showing signs of cooling price pressures, which surprised many, including the Federal Reserve board members. The market interpreted this as having more room for rate cuts, with the probability of a rate cut in January slightly increasing. As a result, after the data release, US stocks and the crypto market surged significantly, with BTC once rising to around $89,000.

However, crypto investors were not happy for long—Bitcoin, like the day before yesterday, rose then fell again, failing to hold the $88,000 level and dropping back to $86,000. Meanwhile, US stocks did not show a significant decline, and gold even broke through $4,300. This indicates that the crypto market is moving independently, which is what we have been discussing as the “liquidation market.” Last night’s market movements again led to both longs and shorts being liquidated; within four hours of sharp rise and fall, a total of $210 million in positions were liquidated, with a very obvious market manipulation feeling.

This morning, the Bank of Japan will announce the latest interest rate decision. Since the BOJ has long signaled a hawkish stance, the rate hike decision is almost a certainty. However, the market is now focused on whether the BOJ will hint at “initiating a rate hike cycle.” If this rate hike marks the start of a cycle, it would be a very bearish signal, indicating the end of the era of interest rate differential trading and a tightening of global liquidity. Conversely, if the BOJ states that this rate hike might be a one-time move, tomorrow could be the moment when a bearish event turns into a bullish one. Coupled with cooling US inflation, a Christmas rally might start before the year’s end, so everything depends on the BOJ’s statement.

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Tags: CPI spread trading rate hike cycle Bank of Japan rate hike consumer price index liquidation market Christmas rally