Bitcoin Reaches Highest Level in Two Months as CPI Stabilizes and Short Squeeze Intensifies

Bitcoin Surges to Highest Level in Two Months

On Tuesday, Bitcoin continued its upward momentum, reaching its highest price in two months as the U.S. corporate earnings season began and investors digested the latest inflation figures.

The leading cryptocurrency saw its value climb by roughly 4.5% during the day, trading just above $95,500—its strongest showing since mid-November, according to CoinGecko data.

This rally led to the liquidation of approximately $587 million in short positions across the crypto market, with Bitcoin-related liquidations accounting for about $292 million, based on figures from CoinGlass.

Traditional Markets Show Mixed Results

Elsewhere, U.S. stock markets presented a varied picture. Financial shares dragged down major indexes after JPMorgan Chase posted earnings that fell short of expectations, causing its stock to drop over 4% and weighing on the broader financial sector.

While the S&P 500 and Nasdaq hovered near their recent peaks, the Dow Jones Industrial Average underperformed as bank earnings influenced the market’s direction for the quarter.

Inflation Data and Federal Reserve Outlook

Investors also reviewed December’s consumer price index, which indicated that annual inflation in the U.S. remained steady at 2.7%, matching forecasts. Core inflation, which excludes volatile items, rose by 2.6%.

Both headline and core CPI saw only slight increases from the previous month. This report reinforced the belief that the Federal Reserve is likely to keep interest rates unchanged for now, though markets are still considering the possibility of rate cuts later in 2026.

Market reactions were muted, with little volatility in equities and only minor shifts in the dollar and Treasury yields.

Although inflation remains above the Fed’s 2% target, the steady pace gives policymakers flexibility to proceed cautiously with any future easing, while speculation about rate reductions continues as the economy shows signs of cooling.

Political and Market Reactions

Former President Donald Trump pointed to the inflation data as a reason for the Federal Reserve to consider easing monetary policy, increasing pressure on Fed leadership to lower rates.

Cryptocurrency traders have been highly responsive to changing expectations around liquidity and monetary policy, factors that contributed to the rally in risk assets late last year.

Bitcoin’s Recent Performance and Market Sentiment

Bitcoin’s recent surge followed a period of sideways movement, as traders adjusted their positions based on macroeconomic signals and growing optimism toward digital assets compared to late 2025.

“Bitcoin’s price seems to be strongly influenced by global liquidity expectations,” said Bill Barhydt, founder and CEO of Abra, in an interview with Decrypt. “Markets are forecasting a significant increase in the money supply this year, mainly due to greater government bond purchases. Additionally, potential retail stimulus around the midterm elections could further support the market.”