Hotter-than-expected inflation raised bets on a Fed rate hike in December, triggering a wave of forced selling in crypto.
- Bitcoin extended its decline after October CPI came in above forecasts, with headline inflation rising 0.4% month over month.
- BTC’s latest pullback triggered a wave of liquidations, with bullish bets accounting for the bulk of positions wiped out after the CPI release.
- Futures markets put the probability of a quarter-point Fed rate increase at the Dec. 9 meeting at 89%, up from about 70% last week.
Bitcoin (BTC) fell below $74,000 on Tuesday after U.S. inflation came in hotter than economists had forecast, prompting traders to raise their bets on an interest rate increase from the Federal Reserve next month.
Bitcoin’s price traded at around $73,660, down 1.3% over the past 24 hours. The decline took it below the roughly $75,700 low it reached on election night last week. On Stocktwits, retail sentiment around BTC continued to trend in ‘bearish’ territory over the past day.
Other major cryptocurrencies also fell. Solana (SOL) fell over 3% in the last 24 hours to around $84, Ripple’s XRP (XRP) also dropped around 3% to $1.06, and leading altcoin Ethereum (ETH) tumbled around 2.8% to roughly $2,000.
The overall cryptocurrency market shed around 1.8% in the last 24 hours, under threat of slipping below the $2.5 trillion mark. The drop set off a wave of liquidations, with around $200 million in crypto positions liquidated in the hour after the report. More than $179 million of that came from long positions. Over the past 24 hours, liquidations totaled about $360 million, including $282 million in bullish bets.
Hotter US Inflation Weighs On Bitcoin, Crypto Prices
The consumer price index, which measures the cost of goods and services purchased by households, rose 0.4% in October from September. Economists had expected a 0.3% increase. Prices had risen 0.6% in September.
Core CPI, which excludes food and energy prices because they tend to be more volatile, increased 0.3%, also above the 0.2% forecast. The report did not include annual inflation figures because the 2025 government shutdown disrupted the collection of price data a year earlier.
Traders Raise Bets On December Fed Rate Hike
The inflation data strengthened expectations that the Federal Reserve will raise interest rates at its Dec. 9 meeting.
Futures markets now put the probability of a quarter-point increase, which would take the federal funds rate to a range of 4% to 4.25%, at 89%, according to the CME FedWatch tool. Traders see an 11% chance of a larger, half-point increase.
That marks a shift from last week, when markets assigned about a 70% probability to any rate increase in December following the midterm elections.
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