Bitcoin Holds $81K After Hot September CPI Revives Fed Rate Hike Bets
Bitcoin traded near $81,500 on Wednesday after US inflation data came in hotter than expected, reviving market bets that the Federal Reserve could raise interest rates again before year-end.
CPI Comes In Hotter Than Expected
The Bureau of Labor Statistics reported that the Consumer Price Index rose 0.6% in September, up from 0.4% in August and in line with economist forecasts. But the year-over-year figure told a more worrying story: annual inflation climbed to 3.7%, above the 3.6% expected and up from 3.4% the previous month.
Core inflation, which strips out volatile food and energy prices, also disappointed. It rose 0.3% for the month — matching August’s pace but beating the 0.2% consensus — while the annual core rate ticked up to 2.6% from 2.4%.
Crypto Dumps Within Minutes of the Release
Bitcoin dropped roughly $1,000 in the minutes after the 8:30 a.m. ET release, sliding from about $83,860 toward $82,700 before steadying. Ethereum fell harder, dropping about 5% to $2,437. CoinMarketCap data showed Bitcoin down roughly 2% and Ethereum off 5% later in the day, with the total crypto market value slipping 0.7% to $2.8 trillion.
Liquidations piled up fast. About $172.6 million in crypto positions were wiped out in four hours, with Bitcoin and Ethereum each accounting for roughly $41 million.
October Rate Hike Back on the Table
The hot reading has dramatically shifted expectations for Fed policy. Markets are now pricing in a 44% chance of two rate hikes by year-end, up from just 13% one week ago. Bond yields surged on the news — the 10-year Treasury yield jumped more than 9 basis points to 5.308%, while the 2-year rose 13 basis points to 4.924%.
Fed officials had already been leaning hawkish. The central bank raised its benchmark rate by 25 basis points in September, and New York Fed President John Williams recently discussed the possibility of another increase this year. The FOMC meets again on October 28, and traders now see an October hike as a real possibility.
Higher rates are a headwind for assets that pay no interest, from gold — which slumped 1.5% to $4,116 an ounce — to riskier bets like crypto. With the US dollar sitting near an 18-month high, the pressure on Bitcoin could persist until the Fed signals a pause.
Source: CoinDesk, Crypto Times