In a dramatic turn of events, Bitcoin (BTC) has fallen below the $81,000 mark during Asian trading hours on Thursday, losing 3.6% in just 24 hours to settle at $80,764. This downturn is part of a broader market reaction to the latest U.S. inflation data, which exceeded expectations and heightened fears of a Federal Reserve interest rate hike.
Alongside Bitcoin, ether (ETH) also faced significant losses, dropping 6.5% to $2,353. Zcash recorded the steepest decline among the top ten cryptocurrencies, plunging 12.8% to $1,101.
The catalyst for this market shift was the release of the U.S. Consumer Price Index (CPI) report for September, which revealed a year-over-year increase of 3.7%, surpassing the anticipated 3.6%. This rise in inflation is causing analysts to recalibrate their expectations regarding the Federal Reserve’s monetary policy.
Following the CPI announcement, Bitcoin’s price quickly fell to $81,926 on Bitstamp, while gold prices also dipped to $4,079 per ounce. The report indicated that gasoline prices were notably responsible for over half of the monthly increase in inflation, rising 9.1% in September.
Inflation Data Shifts Fed Expectations
With the new inflation figures, the CME Group’s FedWatch Tool now indicates a 53.7% probability of a 25-basis-point rate hike during the Fed’s meeting on October 28, a significant rise from just 22.1% the day prior. Furthermore, the likelihood of a second hike in December stands at 50%. Analysts suggest that while the Fed may hold steady in October, there is a strong inclination towards a hike in the following month.
In the wake of the inflation report, the yield on the 10-year U.S. Treasury reached 5.329%, nearing a 24-year high. Economist Robin Brooks commented that this type of data is the “last thing global bond markets needed,” reflecting the widespread concern about rising interest rates.
Asian Markets React
The impact of the U.S. economic data was felt globally, with Asian stock markets also experiencing declines on Thursday. South Korea’s Kospi fell by 8%, while Japan’s Nikkei 225 dropped 5.2%. Major tech stocks like Samsung Electronics and SK Hynix saw losses exceeding 9%. Dominick John of Zeus Research noted that these movements indicated a broader risk-off sentiment among investors, exacerbated by weakness in U.S. tech stocks.
As for Bitcoin, analysts are keeping a close watch on critical support levels, particularly between $72,000 and $75,000, which is identified as a confluence area for various technical indicators, including the Bull Market Support Band and key Fibonacci levels. Analyst Daan Crypto Trades highlighted the significance of this range, indicating that a recovery above $87,000 could trigger a bullish squeeze towards the upper $90,000s.
In the immediate aftermath of the CPI release, Bitcoin’s price fell sharply after hovering between $82,500 and $83,400—an area previously watched for potential support. Currently, this zone is above the current price, and reclaiming it is essential for indicating renewed buyer interest.
As the crypto market reels from these latest developments, liquidations have surged, totaling $951.4 million in just 24 hours, with $876.3 million in long positions. In addition to Bitcoin, Solana and XRP also saw declines of 4.8% and 4.7%, respectively.
Looking ahead, market participants are bracing for the next U.S. inflation report, the September Producer Price Index, scheduled for release on Friday. The results may further shape market sentiment and Fed policy expectations.
