Bitcoin remained at $90,000 as the “ideal” inflation report conceals a significant data discrepancy.

US inflation figures were lower than anticipated, and the Federal Reserve implemented its third consecutive interest rate reduction. The Bank of Japan increased rates for the first time in thirty years without causing a crisis.

On the surface, the macroeconomic landscape heading into year-end appears more favorable than it has in several months.

As of the time of this report, Bitcoin (BTC) has risen 4% since December 18, briefly reaching $90,000 again on December 22, only to pause. There was no significant upward movement, just a short spike, followed by the same erratic range that has characterized the fourth quarter.

The discrepancy between the softer macro environment and Bitcoin’s muted reaction prompts a question: if interest rate reductions and easing inflation are insufficient to spark a rally, what is restraining the market?

The answer lies in the specifics: flawed data, persistently restrictive real yields, and Bitcoin’s inherent structural vulnerabilities.

Positive news with caveats

November’s Consumer Price Index (CPI) provided the headline everyone was hoping for: 2.7% year-over-year compared to the 3.1% forecast, with core inflation at 2.6% against a 3.0% consensus. This represented the lowest core reading since 2021 and the first instance where headline inflation clearly fell back within the 2%-3% range.

However, every significant macro analysis highlights the same issue: the six-week government shutdown resulted in the October CPI not being published, and a portion of November’s prices were estimated rather than directly observed.

Rents and certain services depended on modeled data instead of actual market observations. Analysts warned against interpreting this as a straightforward regime change.

Fed Governor John Williams expressed this skepticism. In his December 19 interview and speech, he described the CPI report as “encouraging” but explicitly pointed out that both inflation and unemployment data are still distorted due to gaps caused by the shutdown.

He then stated there is “no immediate need” for further cuts and characterized policy as “well balanced.”
This is not an indication of a green light. While rates are decreasing, the Fed is indicating that this particular piece of positive news is noisy and not a catalyst for aggressive easing.

For Bitcoin, traders are unlikely to anticipate a significant liquidity surge based on a single flawed report. Markets are awaiting a clear January print before determining whether November was an anomaly or a genuine shift.

Real yields remain dissimilar to 2020-21

Even after three rate cuts and softer inflation, the macroeconomic framework remains tight. The 10-year TIPS yield is approximately 1.9% as of December 22, while the Treasury’s long-term real rate averages in the 1.5%-2% range.

This is significantly higher than the negative real rates of 2020 and 2021, maintaining the discount rate on long-duration risk assets at an elevated level.

US 10-year real yields remain around 1.9% in December 2025, far above the negative rates seen during 2020-2021. Image: FRED

The Fed concluded quantitative tightening on December 1, but this does not imply that quantitative easing (QE) has resumed. Bank notes confirm that Treasury and MBS runoff has ceased, with the next phase described as “reserve management” through limited purchases, not a surge in the balance sheet.

The December 18 H.4.1 release indicates total Fed assets around $6.56 trillion, down roughly $350 billion over the past year.

Williams stressed that new asset purchases are “technical” and “not QE,” aimed at maintaining order in money markets rather than driving a risk-asset surge.

The trajectory has shifted from tightening to less tightening, but real yields remain positive, and the Fed is not injecting fresh dollars into the system.

BoJ hike: anchor removed, but chain still loose

The Bank of Japan’s (BoJ) adjustment to 0.75% was widely anticipated and characterized by Governor Kazuo Ueda as a gradual normalization. Reports indicated that this represents the highest Japanese policy rate in thirty years, with 10-year JGB yields reaching a 26-year peak.

Macro analysts are already discussing the yen-carry aspect, labeling the hike as “structurally important,” noting that if markets begin to price in further increases, it could lead to unwinding of carry trades and forced de-risking across global assets, including Bitcoin.

Currently, the yen has actually weakened again because Ueda emphasized a gradual approach. This provides traders with some leeway but leaves underlying stress in the system. The BoJ has removed the zero-rate anchor but has not yet tightened the chain.

Traders are aware that a genuine carry squeeze can result in 20% to 30% drawdowns, making them hesitant to leverage just because the initial hike occurred without significant disruption.

Bitcoin’s liquidity is diminishing

While macro conditions account for part of the subdued response, Bitcoin’s internal structure explains the remainder.
Glassnode’s Week 50 report describes BTC as range-bound due to substantial underwater supply between approximately $93,000 and $120,000, declining demand, and increasing loss realization whenever the price rises.

Bitcoin holder supply shows increasing short-term losses in late 2025, indicating fading demand and loss realization whenever price attempts to rally. Image; Glassnode

Bitcoin’s aggregated 2% market depth has decreased by about 30% from its 2025 peak, falling from approximately $766 million in early October to around $569 million by early December, coinciding with ETF outflows of $3.5 billion in November.

Furthermore, buying liquidity is “depleting,” with coins primarily circulating among existing holders rather than being absorbed by new capital.

October’s surge to $126,000 had already priced in much of the “good news.” What remains is a market with diminishing depth, erratic ETF flows, and a significant band of underwater supply above the current price.

Implications for 2026

The macroeconomic environment is no longer adversarial, but it also does not resemble the clear, balance-sheet-driven boom that made 2020-21 seem inevitable.

Soft inflation and three Fed cuts would typically serve as strong catalysts, but this time the CPI data is skewed, the Fed is indicating “no urgency,” and real yields remain positive. The transition from QT to neutral policy has not yet evolved into a true liquidity wave.

The BoJ’s first hike to a 30-year high has removed the psychological zero-rate anchor that supported global carry trades, maintaining an overhang above all leveraged risk trades.

Within the crypto space, the market is awaiting either a clear macro break or genuinely new liquidity, rather than just another “good” headline.

Bitcoin is acting like a semi-mature macro asset, responsive to conditions but not explosive. In the gap between softer data and still-tight real conditions, the anticipated boom is not materializing.

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