Recently, the US December core CPI data stirred up a lot of activity. The year-over-year increase was 2.6%, lower than the previous market expectation of 2.7%, and the market immediately sparked a frenzy — from macro traders to the crypto community, everyone is reassessing the Federal Reserve's next move.

After the data was released, short-term interest rate futures reacted quickly, with traders heavily betting on the possibility of a rate cut by the Fed in April, with this probability once reaching 42%. Although a rate cut in June remains widely expected, the speed of this shift is truly astonishing. The entire market seems to be collectively rewriting its understanding of the Fed's policy.

However, a reality check: this does not mean the Fed has thrown in the towel.

The core logic is simple — the Fed's inflation target is set at 2%, and the current 2.6% remains sticky. Looking at the detailed data makes this clear: housing costs remain high, food prices are not decreasing but rising, with grocery prices in December increasing by 0.7% in a single month. These pressure sources have not dissipated, and the Fed is unlikely to relax policy so easily.

Therefore, the surge in the probability of a rate cut in April is less about increased policy certainty and more about the market engaging in a collective psychological game. The upcoming FOMC meeting at the end of January is a key point. Based on recent statements from Fed officials, they are likely to stick to the current interest rate level and maintain a hawkish stance.

The crypto market's sentiment rebounded quickly, but before chasing the highs, it's worth thinking clearly: how much of the market pricing reflects real policy shifts, and how much is just investors playing a expectations game?