#USCoreCPIHitsFour-YearLow

On February 13, 2026, the U.S. Bureau of Labor Statistics finally released the January 2026 Consumer Price Index (CPI) data, which had been delayed by a brief partial government shutdown. The numbers turned out to be notably softer than anticipated, sparking widespread discussion across financial markets.
The headline CPI rose 2.4% year-over-year, down from 2.7% in December 2025 and below the consensus forecast of 2.5%. Even more telling was the core CPI, which excludes the volatile food and energy components and is the Federal Reserve's preferred measure of underlying inflation trends. Core CPI came in at 2.5% year-over-year — its lowest reading since March or April 2021, marking a clear four-year low (or roughly five years from the post-pandemic peak levels).

Monthly figures showed headline CPI up just 0.2% (versus 0.3% expected), while core CPI rose 0.3% (slightly above December's 0.2% but still aligned with expectations). Key drivers of the cooling included falling energy prices (down sharply, with gasoline dropping significantly), slower shelter inflation (housing costs eased to 3.0% annually from 3.2%), declines in used car prices, and modest increases in groceries and other essentials.

This release confirmed that the inflationary pressures from the pandemic era, supply chain disruptions, and earlier energy shocks are continuing to fade substantially. We're now much closer to the Fed's long-standing 2% target, though some categories like services and personal care remain somewhat sticky.
Broader Economic and Policy Implications
This softer-than-expected print carries strongly dovish implications for the U.S. economy and monetary policy.

Federal Reserve Outlook: The data bolsters confidence that inflation is sustainably trending lower without derailing growth. It increases the likelihood of interest rate cuts later in 2026, particularly from June onward. Market-based tools like the CME FedWatch showed jumps in probabilities for cuts — for instance, odds for a June cut rose notably, with traders pricing in roughly 50-80% chances for easing moves in mid-year meetings depending on the session. While March remains low-probability (under 10-20% in most readings), the overall path points to at least one or two 25-basis-point reductions this year, assuming no major reacceleration.

Bond Market and Yields: Treasury yields reacted sharply lower in the immediate aftermath. The 2-year yield dropped to multi-year lows in some intraday moves, and the 10-year yield fell toward 4.05% — its softest level since late 2025. Lower yields reduce borrowing costs across the economy, supporting everything from mortgages to corporate investment.

Dollar and Global Effects: The U.S. dollar weakened modestly on the news, which is typically positive for commodities, emerging markets, and dollar-denominated assets. Real wage growth accelerated as nominal wages outpaced the slower price increases, boosting consumer purchasing power and supporting the "soft landing" narrative — economic growth continues without triggering a recession.

However, caution remains warranted. Some monthly core components ticked up slightly, shelter and services inflation are still elevated compared to pre-pandemic norms, and potential policy changes (such as tariffs under the current administration) could exert upward pressure on goods prices later in the year. The Fed will stay highly data-dependent, closely watching upcoming releases like core PCE (their preferred gauge), employment data, and the Fed minutes.

Overall, this report strengthens the case for a controlled disinflation process, giving policymakers more flexibility and reducing fears of prolonged restrictive policy.
How This Directly Influences the Crypto Market
Cryptocurrencies, particularly Bitcoin, behave as high-beta risk-on assets. They thrive in environments of declining interest rates, abundant liquidity, a weaker dollar, and rising risk appetite — all of which this CPI print encouraged.

Immediate Market Reaction: Crypto surged sharply right after the release. Bitcoin climbed 4-6% intraday and over the weekend, breaking back above the psychologically critical $70,000 level (with peaks reported around $70,000–$70,170 on some exchanges). From pre-release levels hovering in the $66,800–$67,500 zone, it delivered a quick rebound.

Broader Crypto Rally: Ethereum, Solana, and many altcoins posted even stronger gains of 5-10% or more in the following sessions. The total crypto market capitalization added tens of billions of dollars in value almost immediately. Bitcoin dominance held relatively steady, but the overall sentiment shifted firmly toward risk-taking.

Why Crypto Responded So Strongly: Lower inflation readings signal potential Fed easing ahead, which floods markets with cheaper money and encourages speculation in high-growth, high-volatility assets like crypto. Bitcoin, increasingly viewed as both "digital gold" (inflation hedge) and a growth/tech proxy, benefits doubly. Institutional inflows into Bitcoin ETFs picked up again, and the break above $70k triggered short covering, liquidations of bearish positions, and renewed FOMO buying.

Specific Impact on Bitcoin: Price Movement Breakdown
Pre-Report Context: In the lead-up to the release (early February 13), Bitcoin had been consolidating in a corrective phase, trading mostly between $65,000–$68,000 after pulling back from higher levels. Sentiment was cautious amid mixed macro signals.

The soft CPI catalyzed one of Bitcoin's strongest short-term reactions in recent months. It rose roughly 4-6% within hours and touched over $70,000 briefly over the weekend — a gain of about 5% from Friday lows around $66,800.
Subsequent Action: By February 16-17, Bitcoin pulled back somewhat to the $68,000–$68,800 area as traders locked in profits ahead of further data (like Fed minutes and core PCE). Still, it remained elevated compared to pre-CPI levels, avoiding deeper downside tests toward $60,000–$65,000 support that might have occurred on a hotter print.

This single data point provided crucial bullish momentum, helping Bitcoin reclaim key psychological territory and reinforcing the broader uptrend narrative for 2026.
Longer-Term Perspective and Risks
If upcoming inflation prints (February CPI in March, core PCE, etc.) continue showing disinflation, Bitcoin and crypto could see sustained upside pressure, with analysts eyeing $80,000–$100,000+ targets this cycle. Lower rates historically correlate with capital flowing into speculative assets.

That said, risks persist: any reacceleration from tariffs, strong economic data pushing back cuts, or geopolitical events could trigger reversals. The Fed remains cautious, and markets can overreact to single prints before correcting.
In summary, the core CPI hitting a four-year low was a clear macro tailwind. It eased inflation fears, boosted rate-cut hopes, weakened the dollar temporarily, and directly fueled a sharp relief rally across crypto — with Bitcoin gaining a solid 4-6% boost and reclaiming $70k as a direct result. This reinforces why crypto traders watch U.S. inflation data so closely: it shapes liquidity, sentiment, and positioning in a big way.