Bitcoin exploded 4.6% to $69,700 on Friday after U.S. January CPI printed 2.4% year-over-year — a tenth below consensus — delivering the sharpest single-session crypto rally since the February 6 capitulation reversal. The move was mechanically violent: BTC ripped from a session low of $66,548 to a high of $69,852, with perpetual volume on the BTC pair alone hitting $2.89 billion. The Bitstamp daily candle confirmed the strength, printing O:68,812 / H:69,823 / L:68,701 / C:69,692 (+$880, +1.28%) — though the perpetual data, which captures the full 24-hour cycle including the pre-CPI weakness, shows the larger +4.63% move. The rally briefly pierced the $70,000 psychological level on some exchanges before sellers capped the advance.
Crypto outperformed every other macro asset class on the day. While the S&P 500 gained just 0.05% and gold rose 1.11% to reclaim $5,034, digital assets staged a risk-on eruption: SOL led the majors with an 8.18% surge, ETH jumped 6.33%, XRP gained 5.76%, and BCH ripped 9.16%. The outperformance was concentrated in the most oversold segments of the market — precisely where short positioning had been heaviest. The derivatives complex confirmed this: the rally liquidated approximately $280 million in short positions across BTC and major alts, the largest short squeeze since the $60,000 capitulation bottom. Perpetual funding rates flipped mildly positive for the first time in a week, suggesting fresh speculative long interest rather than just short covering.
The CPI catalyst was unambiguous. Headline inflation at 2.4% was the lowest since May 2025, and core CPI at 2.5% matched expectations — removing the risk of a hawkish upside surprise that markets had feared. The data reinforced expectations for at least two Fed cuts by September (61bp priced into futures). However, the reaction in rates was muted: March cut odds remained below 10% per CME FedWatch, and 10-year Treasury yields fell only modestly to 4.07%. Bitwise’s André Dragosch pointed out that alternative inflation gauges like Truflation had already signaled sub-1% readings, suggesting the market’s CPI enthusiasm may be overshoot. The U.S. has now spent six consecutive years above the Fed’s 2% target.
Among smaller-cap tokens, the session revealed a classic bear-market short-squeeze pattern. Bittensor (TAO) surged 30.13% and MANTRA (OM) gained 30.07% — both AI-adjacent narratives catching a bid. Zcash (ZEC) ripped 23.31% and Compound (COMP) rose 21.35%, classic “beta recovery” trades in oversold DeFi and privacy sectors. On the downside, POWER crashed 31.06% and RIVER fell 25.70%, giving back gains from earlier in the week — the hallmark of speculative micro-cap tokens that pump and dump within 48-hour cycles. Clore.ai (CLO), which surged 48% on Thursday, reversed 20.69% on Friday, completing a textbook round-trip. Silver remained the notable cross-asset laggard, falling 1.84% to $77.48 even as gold reclaimed $5,000.
