Bitcoin Slides After Hotter-Than-Expected US Inflation Data

what happened

Bitcoin dropped on Wednesday as US consumer-price inflation stayed stubbornly high, raising the likelihood of higher interest rates and dragging cryptocurrencies lower. The leading token lost 2.1% over the day and traded at $81,624 in the afternoon.

The decline started in the morning. According to the Labor Department, consumer prices in September were 3.7% higher than a year earlier, compared with a 3.4% gain in August. Economists surveyed by The Wall Street Journal had expected a 3.6% rise. After the 8:30 a.m. ET release, bitcoin fell below $82,000 from nearly $84,000.

Glassnode said bitcoin now sits near the average cost basis of US spot ETFs. Below that, a large block of bids on Binance at $80,000 forms a key support level. Analysts have projected that a break below it could push prices back toward $70,000, erasing last month's sharp gains.

why it matters

Sygnum Bank investment strategist Can-Luca Köymen said: "Core [inflation] at 0.3%, above consensus, puts an October hike back in play after the market had faded it to one in five." The CME FedWatch tool put the chance of rates staying unchanged after the Fed's October 28 meeting at 67%, and a quarter-point increase at 33%. Right after the CPI report, odds of a hike had swung to 50/50. Köymen said higher yields and a firmer dollar are the main near-term headwinds for bitcoin.

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