Bitcoin Hits Two-Month High as CPI Steadies and Short Covering Accelerates

Bitcoin extended gains on Tuesday, climbing to a two-month high as U.S. corporate earnings got underway and investors absorbed fresh inflation data.

The world’s largest cryptocurrency was up about 4.5% on the day, trading just above $95,500—its strongest level since mid-November, according to CoinGecko.

The advance triggered an estimated $587 million in liquidations of crypto short positions, including about $292 million tied to Bitcoin, according to CoinGlass.

"Over the past week and a half, we’ve witnessed several global events that remind investors why Bitcoin was created in the first place," Ryan Rasmussen, head of research at Bitwise, told Decrypt.

Rasmussen cited the collapse of Iran's fiat currency, the U.S. Department of Justice's subpoena of Fed Chair Jerome Powell, and recent events in Venezuela as "catalysts."

"On their own, each of these catalysts ... is meaningful," he said.



Traditional markets, meanwhile, have offered a mixed picture. Financial stocks weighed on major U.S. indexes after JPMorgan Chase reported weaker-than-expected results, with shares sliding more than 4%, pulling the broader financial sector lower. 

The S&P 500 and Nasdaq remained near recent highs, but the Dow Jones Industrial Average lagged as bank earnings set the tone for the quarter.

Investors also parsed December’s consumer price index data, which showed U.S. inflation held steady at a 2.7% annual pace, in line with forecasts, with underlying “core” inflation rising 2.6%. 

Month-to-month gains in both headline and core CPI were modest. The report reinforced expectations that the Federal Reserve will keep interest rates unchanged in the near term, even as markets price in possible cuts later in 2026. 

Markets reacted with subdued equity volatility and modest moves in the dollar and Treasury yields.

The inflation outcome, steady but still above the Fed’s 2% target, gives policymakers room to tread carefully on further easing, while keeping alive speculation that rate cuts will come as the economy cools. 

President Donald Trump framed the data as justification for looser policy, renewing pressure on Federal Reserve leadership to cut rates.

Crypto traders have been sensitive to shifts in expectations over liquidity and monetary policy, which helped lift risk assets late last year. 

Bitcoin’s ascent this week followed a period of consolidation, with market participants positioning around macro cues and improving sentiment toward digital assets compared with late 2025.

“Bitcoin’s price appears closely tied to expectations around global liquidity,” Abra founder and CEO Bill Barhydt told Decrypt. “Markets anticipate a sharp expansion in the money supply this year, driven largely by increased government bond purchases, while retail stimulus around the midterm elections could provide an additional boost.”