The data looks good, but the market story is far from simple.

As soon as the US CPI data was released, it became the focus—2.7% not only fell short of expectations but also marked a low in over two years. On social media, some are already discussing the possibility of rate cuts and even looking forward to the subsequent market movements.

Indeed, seeing this set of data can give a sense of clarity. But turning around to look at the market, Bitcoin quickly plunged from a high of $89,500, with the lowest touching $84,400. This intense volatility once again reminds us: the market never plays by the rules.

**The True Meaning of Inflation Data**

The overall decline in CPI is evident. The current inflation level is approaching the Federal Reserve’s 2% target, the first time since the pandemic that it has come so close. In other words, the "inflation control" emphasized by the Fed is finally showing tangible results.

The market’s big reaction is essentially an expectation: that cooling inflation might mean the window for rate cuts is opening. The probability of the Fed implementing a rate cut in January has risen from 26.6% to 28.8%—the change seems small, but the direction is very clear.

This expectation immediately influenced capital flows. The dollar weakened, bond yields declined, and risk assets like Bitcoin were pushed higher. The logic is straightforward: liquidity expectations are shifting toward easing, and crypto assets, as typical risk-sensitive assets, react most sharply to such signals.

**What Is the Market Trading**

The current market essentially prices in an expectation—that market liquidity will soon loosen. But how solid is this expectation? Short-term volatility has already provided an answer.