December's inflation reading came in at 2.7% year-over-year, holding its ground from previous months. For crypto traders and on-chain investors, these numbers matter more than you might think.

Why? When inflation stays relatively flat, it signals the Fed might have breathing room to adjust rates in early 2025. Lower rate expectations typically drive capital into risk assets—including Bitcoin, Ethereum, and altcoins. Conversely, if inflation ticks higher later, we could see policy tightening that shifts asset allocation away from digital assets.

The takeaway: watch this monthly trend closely. A sustained 2.7% print keeps the narrative of price stability intact, which typically supports a risk-on environment. But any significant shifts in CPI will ripple through crypto markets faster than traditional equities.