January 14th, the crypto market kicked off the year with a fierce rally. Bitcoin surged from yesterday's low of $91,000 by over $5,000, breaking through the key levels of $93,000, $94,000, and $95,000 consecutively, with a peak of $96,120 before closing at $95,860. The single-day increase was 5.18%, the largest since 2026. Ethereum also performed strongly, reaching $3,300 with an intraday gain of over 8.77%. The entire crypto market was energized by this rally, with total market capitalization bouncing back to $3.1 trillion, up more than 4% in 24 hours. Short sellers were crushed in this upward move, with liquidations exceeding $200 million in total.

This rally may look fierce, but there are clear reasons behind it. Two forces are at play simultaneously: one from macroeconomic data and the other from policy developments.

First, let's look at the US December core CPI data. The core CPI increased by only 2.6% year-over-year, breaking the market expectation of 2.7%, and the month-over-month increase was just 0.2%. This confirms signals of cooling inflation. After seeing this data, the market interpreted it as the Federal Reserve's rate cut window not being closed yet. Investors began recalculating the number of rate cuts in 2026, raising expectations from one to more than two. Once rate cut expectations are established, risk assets tend to rally. Bitcoin, as a high-beta asset, naturally leads the charge.

The other force comes from regulatory policy. The US Senate Banking Committee is scheduled to review a bill on January 15th that clarifies the digital asset market. The emergence of such policy signals indicates a subtle shift in attitude towards crypto assets. The opening of policy space often signals the prelude to capital inflows. The combination of these two forces has fueled today's year-start rally.