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Why Bitcoin and Stocks Are Falling Despite Slowing U.S. Inflation
U.S. inflation data came in far better than expected — marking the strongest “undershoot” versus forecasts in recent months. But instead of sustained growth, the market unexpectedly moved lower: both Bitcoin and U.S. equities fell sharply during U.S. trading hours.
This surprised many traders, but there is a logical explanation for such asset behavior. The reason lies not in macroeconomics, but in market structure, positioning, and liquidity.
What Happened After the CPI Release
Annual inflation in November slowed to 2.7%, compared to expectations of 3.1%. Core CPI also came in below forecasts at 2.6%.
On paper, this was one of the most “bullish” inflation reports of 2025. Initially, the market reacted as expected: Bitcoin surged toward $89,000, and the S&P 500 also jumped immediately after the data release.
But the rally quickly faded.
Short-term spike and subsequent decline in Bitcoin price following the CPI release. Source: CoinGecko
Roughly half an hour after the CPI publication, Bitcoin reversed. After a local high near $89,200, the price dropped sharply toward the $85,000 area.
The S&P 500 followed a similar pattern: sharp intraday swings nearly erased the initial gains. Only later did the market stabilize.
Sharp drop and subsequent rebound in the S&P 500 following the CPI release. Source: X / Kobeissi Letter
This synchronized movement between the crypto market and the equity market is important. It indicates that the move was not asset-specific and not driven solely by sentiment. It was structural in nature.
Aggressive Selling Volume Explains Much of the Move
The key clue lies in Bitcoin’s taker sell volume data.
Intraday charts show large spikes in market sell orders precisely at moments when price broke support levels. These trades indicate not calm profit-taking, but aggressive selling at market.
Most of these spikes occurred during U.S. trading hours and coincided with the fastest phase of the decline.
Bitcoin Taker Volume across all exchanges, December 18. Source: CryptoQuant
Looking more broadly, the same pattern appears on the weekly chart. Similar selling waves have occurred several times in recent days during periods of elevated liquidity. This looks more like systemic or forced selling rather than retail exits.
Such behavior is typical of leveraged position liquidations, volatility-linked strategies, and algorithms that automatically reduce risk. When price moves against leverage, the process accelerates.
Bitcoin Taker Volume across all exchanges over the past week. Source: CryptoQuant
Why Good News Became the “Trigger”
The issue wasn’t that the report was bad. On the contrary — it was too good.
Lower inflation temporarily improved market conditions: liquidity increased and spreads tightened. In such an environment, it is easier for large players to execute sizable trades.
Bitcoin initially surged. But it appears to have run into a dense zone of resting orders, stop losses, and short-term leveraged positions. The rally stalled, price reversed, and this triggered long position liquidations.
Once liquidations began, forced market selling amplified the downside move. That is why the decline was sharp rather than gradual.
The S&P 500 showed similar “whipsaw” behavior. Such moves around major macro releases are often linked to dealer hedging, options-related flows, and real-time adjustments of systematic strategies.
Are There Signs of Manipulation?
The charts do not prove direct manipulation. However, they do show behavior that often resembles stop hunting and liquidity extraction:
- rapid moves toward obvious levels
- reversals immediately after liquidity improves
- sharp spikes in aggressive selling on breakdowns
- clear alignment with U.S. trading hours
This is typical of markets with high leverage. More often than not, such moves are driven not by individuals, but by large funds, market makers, and systematic players. They operate simultaneously across futures, options, and spot markets. Their goal is execution and risk management, not playing on crowd sentiment.
In the crypto market, where leverage remains high and liquidity thins quickly outside key trading hours, such moves appear especially abrupt.
What It All Means
The current decline does not invalidate the CPI signal. Inflation has indeed slowed, which is a supportive factor for risk assets in the long run. What the market experienced was more of a short-term position reset rather than a reversal of the broader trend.
In the near term, traders will be watching whether Bitcoin can hold above key support levels and whether selling pressure eases as the market digests recent liquidations.
If aggressive selling volume begins to decline and price stabilizes, the positive impact of the favorable inflation data may still emerge in upcoming sessions.
See also: "Bitcoin Whales Sold Off $2 Billion Worth of BTC: January Will Decide the Fate of the Bull Market"
