Bitcoin and global stock markets weakened after stronger-than-expected U.S. inflation data renewed speculation that the Federal Reserve could raise interest rates in October. Although market-implied odds of a rate hike briefly approached 50% following Wednesday’s report, expectations have since eased.
Bitcoin, the largest cryptocurrency by market value, was down 1% from midnight UTC. The price briefly approached $80,000 during early Asian trading before rebounding to roughly $81,500. However, the recovery faded, leaving BTC trading near $81,000, according to CoinDesk data. Bitcoin has declined by more than 2% over the past 24 hours.
Other leading cryptocurrencies recorded larger losses. Ether, XRP and Solana fell between 3.5% and 4%, while PYTH remained the only cryptocurrency among the top 100 by market capitalization to maintain gains exceeding 7%.
The downturn extended to traditional financial markets. Nasdaq futures had dropped 1% at the time of writing, adding to Wednesday’s 2% decline. South Korea’s KOSPI index suffered an 8% plunge, prompting authorities to activate circuit breakers to manage the sharp selloff.
U.S. inflation data released Wednesday showed that consumer prices rose 3.7% year over year in September, accelerating from 3.4% in August and surpassing economists’ forecasts. Core CPI, which excludes volatile food and energy costs, increased 2.6%, compared with 2.4% in the preceding month.
The hotter inflation reading led traders to reassess the likelihood of a Federal Reserve rate increase this month. On prediction market Polymarket, the probability of an October hike surged briefly to almost 50% before retreating to around 30%. CME’s FedWatch tool recorded a similar move, with the implied odds jumping from approximately 22% to nearly 47% before falling to 26% at the time of writing.
Vikram Subburaj, CEO of India-based cryptocurrency exchange Giottus, said the latest inflation figures had intensified concerns that borrowing costs could remain elevated for longer. With annual inflation reaching 3.7% in September, he said uncertainty over the Fed’s next policy decision had increased.
Subburaj also highlighted fragile institutional demand for Bitcoin. U.S. spot Bitcoin exchange-traded funds registered $150.5 million in net outflows on October 14, reversing the $175.7 million in inflows recorded during the previous session.
Market-making firm STS Digital warned that uncertainty surrounding the Federal Reserve’s upcoming decision could undermine liquidity and discourage investors from taking risks across asset classes.
“With the next FOMC a coin flip, this uncertainty is damaging liquidity and dampening risk appetite across all asset classes,” the firm’s Anderson told CoinDesk in an email.
Despite the heightened uncertainty, Anderson expects the Fed to keep rates unchanged this month. That outlook is consistent with CME Fed funds futures, which showed a greater than 70% probability of the central bank maintaining its existing policy rate at the time of writing.
Anderson also noted that cryptocurrencies have become more sensitive to macroeconomic developments despite recent optimism in digital asset markets. Higher energy costs, turbulence in fixed-income markets and concerns about valuations in the artificial intelligence sector are contributing to weaker investor sentiment.
