Crypto Market Drops Sharply Ahead of US CPI; BTC and ETH Lead Declines

I. Crypto Market Overview

Key Takeaways

Macro Environment

The US December CPI report will be released today, with markets watching for inflation signals that could impact Fed rate cut expectations. China’s central bank injected $12.3 billion to stabilize liquidity, supporting risk sentiment. Dubai and India have tightened crypto regulations, increasing compliance costs and reducing anonymity.

Crypto Market

The crypto market saw broad declines over the past 12 hours, with Bitcoin down 4.43% to $97,474 and Ethereum falling 9.27% to $3,144.86, pressured by risk-off sentiment ahead of the US CPI release. Most major altcoins dropped sharply; Story Protocol (IP) led losses, down 16.40%, while Aerodrome Finance (AERO) fell 14.23%. Monero (XMR) outperformed, dropping only 2.52%, as privacy coin demand remains resilient despite regulatory headwinds.

Today's Outlook

The US December CPI and Core CPI data will be released at 8:30 a.m. ET, providing critical signals for inflation and Fed policy. Polygon will host an X Spaces event on the 'Open Money Stack' at 12 p.m. ET, drawing attention to DeFi and payments innovation.

Fear and Greed Index

0.00% Annual Percentile

41 Neutral

Total Crypto Market Cap

$3.11T

0.34%

Total Market Trading Volume

$104.86B

71.71%

Altcoin Season Index

45.45%

Quarterly Percentile

28 / 100

Total Futures Market Open Interest

3.10B

16.26%

Futures

662.93B

14.44%

Perpetuals

II. Industry Updates

Macro-economic Policies

The US December CPI report will be released on January 13, with consensus expecting a 2.7% YoY increase; a higher-than-expected print could delay Fed rate cuts, tightening global liquidity and impacting Bitcoin and DEFI risk appetite.

CICC advises increasing allocations to stocks and gold as a hedge against potential US inflation surprises, warning that persistent inflation may slow Fed easing and create volatility across crypto and traditional assets.

China's central bank injected $12.3 billion via seven-day reverse repos to stabilize short-term liquidity, supporting local credit markets and indirectly sustaining risk sentiment in global crypto markets.

CITIC Securities forecasts a 50 basis point Fed rate cut in 2026 after weak US employment data, which could boost crypto market liquidity and support digital asset valuations.

BlackRock's 2026 outlook highlights rapid stablecoin adoption as a risk to emerging market currencies and sees digital assets, including Bitcoin, gaining traction as alternative stores of value amid macro uncertainty.

Cryptocurrency Regulatory Trends

Dubai's DFSA has implemented new crypto regulations, shifting token approval responsibility to licensed firms and banning privacy coins in DIFC, increasing compliance costs and reducing anonymity for digital assets.

India's Financial Intelligence Unit now requires live selfie KYC, geolocation, and frequent ID updates for crypto users, tightening AML controls and reducing anonymity, which may deter illicit activity but increase onboarding friction.

Nigeria has enacted a new tax law mandating VASPs to collect and report customer TIN/NIN and transaction data, integrating crypto into the tax system and increasing traceability, likely impacting user privacy and compliance costs.

Thailand will enforce the Travel Rule for digital assets, requiring identification of both sender and receiver in all wallet transfers, aiming to eliminate anonymity and strengthen anti-money laundering measures in the crypto sector.

The U.S. Senate Banking Committee is set to vote on the CLARITY Act this week, which would clarify SEC and CFTC oversight, potentially boosting institutional confidence and liquidity in U.S. crypto markets.

Story Protocol (IP): Story Protocol (IP) surged 26% in 24h to $2.90, driven by strong trading activity on Korean exchange Upbit and recent network upgrade events, marking its best daily gain since October 2025.

Aerodrome Finance (AERO): Aerodrome Finance (AERO) rose 3.98% in 24h, with $35.9M trading volume and over $516M market cap, fueled by its role as Base network's central liquidity hub and robust liquidity incentives.

Monero (XMR): Monero (XMR) jumped 13.35% in 24h to $567.29, with $395M trading volume, reaching a new all-time high amid renewed demand for privacy coins and increased market volatility.

Smart Money Movements

MicroStrategy acquired 13,627 BTC for $1.25 billion last week, raising its total Bitcoin holdings to 687,410 BTC, the largest among public companies.

Harvard University allocated $500 million to Bitcoin, doubling its gold investment, as a hedge against currency debasement and rising U.S. debt concerns.

Bitmine staked an additional 109,504 ETH worth $340 million, bringing its total staked Ethereum to over 1.19 million ETH, valued at $3.7 billion.

Morgan Stanley led a new wave of institutional crypto adoption, with recent S-1 filings for Bitcoin and Solana ETFs, signaling increased Wall Street engagement.

Blackrock deposited $307 million in Bitcoin and Ethereum to Coinbase, including 3,143 BTC ($285M) and 7,204 ETH ($22.42M), highlighting ongoing institutional activity.

Events to Watch

Jan 13 (Tue)

US December CPI and Core CPI data will be released at 8:30 a.m. ET, providing key signals for inflation and Fed rate expectations; Polygon will host an X Spaces event on the 'Open Money Stack' at 12 p.m. ET.

Jan 14 (Wed)

BNB Chain's Fermi hard fork is scheduled at 02:30 UTC, aiming to improve speed and reliability; US December PPI data will be released, offering insights into wholesale inflation.

Jan 15 (Thu)

Ravencoin (RVN) will undergo its second block reward halving, reducing mining rewards by 50%; US Senate Banking Committee will hold a markup on digital asset market structure legislation, potentially shaping crypto regulation.

Jan 16 (Fri)

Arbitrum (ARB) will unlock 92.65 million tokens (~$18.8M), representing 1.86% of supply, possibly impacting market liquidity.

Jan 18 (Sun)

Ondo (ONDO) will unlock 1.94 billion tokens (~$780M, 57.23% of supply), a major event likely to drive volatility in the token's price.

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