US PPI data pending, BTC consolidates amid economic expectations and geopolitical situation

The cryptocurrency market has recently demonstrated independence once again. While US stock indices generally came under pressure, Bitcoin successfully rebounded above $90,000, and Ethereum also regained the $3,000 level. Behind this rally, the weaker-than-expected performance of the US core Consumer Price Index (CPI) (CPI) played a significant role—market expectations suggest that inflationary pressures may not be as severe as previously assessed, which could shake the Fed’s expectation to keep interest rates unchanged in January, thereby injecting new upward momentum into the crypto market.

But this also raises an interesting paradox: why did US stocks decline at the same time? The recent market developments provide an answer. Amid the ongoing downturn in the crypto market, US stock indices have hit new highs for several consecutive days, with gains exceeding reasonable levels, making a technical correction inevitable. The same logic applies to the crypto market—after a significant decline, a rebound naturally occurs. In short, this is a market self-adjustment process.

Chain Reaction Triggered by US Economic Data

To trace the deeper reasons behind the US stock decline, geopolitical risks are becoming new market disruptors. Recent shifts in the US stance on Iran indicate rising conflict risks, leading the market to price in potential war scenarios. Interestingly, the crypto market’s reaction to this risk has led traditional financial markets, which explains why the crypto market entered a correction cycle before US stocks.

Dual Catalysts: US PPI Data and Fed Remarks

Market attention has recently shifted to the upcoming US Producer Price Index (PPI) data. As an important inflation indicator supplementing CPI, the performance of PPI data will directly influence market expectations of the Fed’s policy stance. Additionally, several Fed officials are scheduled to make policy statements, which could trigger another wave of market volatility.

Time Window of Risks and Opportunities

In the short term, if the US or Israel confirms military action against Iran, even the overheated crypto market may face correction pressure. However, once geopolitical tensions are somewhat clarified, markets tend to quickly digest the risks and rebound. Therefore, this uncertain period could be a good opportunity for strategic positioning—key to closely monitoring US economic data releases and geopolitical developments, and swiftly seizing rebound opportunities once risks are clarified.