US December CPI to be released tonight, Federal Reserve officials to speak intensively, a critical 24 hours for the crypto market

Today is an important day. The US December CPI data will be released at 21:30 Beijing time, followed by St. Louis Fed President Mu Sallam’s speech at 23:00. This is not only a key moment for the macro markets but also directly determines the direction of the upcoming crypto market. This morning, influential officials such as Fed Williams, Bostic, and Barkin also delivered speeches, making the entire trading day dominated by the Fed’s voice.

Why is today so important

CPI data is a barometer of Federal Reserve policy

The US December CPI is the most critical indicator of inflation. This data directly influences the Fed’s next policy direction. If the CPI exceeds expectations, it indicates that inflationary pressures have not fully eased, and the Fed may slow down rate cuts or reconsider its stance. Conversely, if the data is below expectations, the market will anticipate continued easing by the Fed.

According to relevant information, spot gold has already gained over $177 this week (an increase of over 4%), and spot silver has risen over $7 (an increase of nearly 10%). This shows that the market is re-pricing expectations for Fed policy. The strong performance of precious metals reflects investors’ concerns about geopolitical risks and the Fed’s policy shift.

What signals are Fed officials sending with their dense speeches

This list is quite interesting. Williams, as the New York Fed President and a permanent FOMC voter, has the highest influence. Mu Sallam, although a 2028 voter, as the St. Louis Fed President, also provides valuable insights into Fed policy.

Fed officials’ dense speeches before and after the CPI release are usually meant to “warm up” or “cool down” the market. If their speeches signal hawkishness (supporting tighter policies), the market will pre-absorb this expectation. The opposite is also true.

Impact pathways on the crypto market

Short-term impact (tonight to tomorrow)

After the CPI data is released, US stocks and bond markets will react immediately. If the data exceeds expectations, risk assets (including cryptocurrencies) will come under pressure. If the data is below expectations, the market may rebound. Mu Sallam’s speech will further confirm the Fed’s stance.

Medium-term impact (next week)

Other Fed officials will also speak on Wednesday and Thursday. If these speeches align with the CPI data in signaling policy, the market will quickly adjust expectations. This will directly affect the crypto market’s liquidity outlook.

Fundamental logic

The crypto market is highly sensitive to Fed policy. An easing environment generally benefits risk assets, including Bitcoin, Ethereum, etc. Conversely, if the Fed signals tighter policies, the crypto market will face pressure. CPI data and Fed officials’ speeches are direct signals for policy direction.

What to focus on

The data itself

Pay attention to four indicators: US December unadjusted YoY CPI, seasonally adjusted MoM CPI, seasonally adjusted core MoM CPI, and unadjusted core YoY CPI. Core CPI (excluding food and energy) often better reflects true inflation pressures because it removes volatile factors.

The wording of officials’ speeches

How will Mu Sallam evaluate the current inflation situation? Will his future policy stance be “patient” or “cautious”? These subtle wording changes can be amplified by the market.

Market reaction consistency

If CPI data and Fed officials’ speeches align (both hawkish or both dovish), market reactions will be more intense. If conflicting signals appear, the market may become more cautious.

Summary

Today marks an important node in Fed policy expectations. CPI data and Fed officials’ speeches will jointly determine the market’s outlook on future liquidity. For the crypto market, this means potential increased volatility but also clearer direction.

My personal view is that the significance of this moment lies not only in the data itself but also in whether the Fed’s attitude towards inflation and the economy shifts. If the Fed begins to signal more caution, the crypto market may need to adjust expectations. Conversely, if the Fed continues to emphasize policy flexibility, the market may remain bullish.

The key is to monitor these signals in real-time rather than just the data. The Fed’s wording often has a greater impact on market trends than the data itself.