Bitcoin may be undervalued for the January rate cut window, with market pricing deviating before the CPI

Analysts point out that Bitcoin’s recent price range convergence and low volatility may not fully reflect the changing probability of a rate cut in January. Before the release of key inflation data, market expectations for the Federal Reserve’s policy path appear overly calm, which could set the stage for pricing errors.

From the market performance perspective, Bitcoin has mainly traded within the $90,000 to $94,000 range over the past two months, with limited short-term pullbacks and implied volatility remaining at multi-year lows. Overall, this state resembles a “policy expectation vacuum” rather than stability after risk has been fully cleared.

Quinn Thompson, Chief Investment Officer at Lekker Capital, believes that the market’s bet on “no more rate cuts” is overly optimistic, ignoring potential changes in data and political variables. He points out that, against the backdrop of the Trump administration’s continued pressure for easing policies, the possibility of rate cuts in January and mid-term phases has not been fully priced into asset prices. The current risk distribution shows clear asymmetry.

Another analyst, Sean Dawson, shares a similar view. He states that the probability tools for interest rate cuts in January are giving a lower expectation, while in reality, weakening employment data and sticky core inflation coexist, making single-scenario assumptions difficult to hold. Especially under the influence of tariff disruptions and previous government operational restrictions, the recently released CPI data is seen as a key trigger.

Political uncertainties are also not to be ignored. Derek Lin, Head of Research at Caladan, points out that the judicial disputes surrounding Powell and ongoing pressure from the White House are testing the Federal Reserve’s independence like never before. In this environment, the “tail risk” of policy shifts is systematically underestimated by the market.

As for the outcome, the trend may diverge significantly. If inflation remains strong, the Fed may maintain a hawkish stance, and Bitcoin could continue to fluctuate sideways; but if data softens and policy expectations are revised, prices could rise rapidly. For investors paying attention to Bitcoin price movements, Fed rate cut expectations, and macro policy interactions, the current stage is more like a neglected key window.