Key facts
- Bitcoin fell below $83,000 after U.S. consumer prices rose 3.7% year over year in September, exceeding forecasts.
- The cryptocurrency was trading at $82,142, down 1.5% in 24 hours.
- Core CPI, a closely watched inflation gauge, rose 2.6% annually against a 2.5% forecast.
- The probability of a Federal Reserve rate hike in October increased to approximately 44%-49%.
- Higher Treasury yields, with the 10-year reaching about 5.3%, compete with risk assets like Bitcoin.
Bitcoin's price declined on Wednesday, falling below the $83,000 mark as investors reacted to U.S. inflation data that came in hotter than expected for September. The cryptocurrency was recently trading around $82,142, representing a 1.5% drop over a 24-hour period.
The latest Consumer Price Index (CPI) report showed a 0.6% increase in prices for September, surpassing the 0.4% rise recorded in August. On an annual basis, inflation advanced to 3.7% through September, up from 3.4% in the prior month, according to the Bureau of Labor Statistics. Economists had expected 3.6%.
Gasoline prices jumped 9.1% in a single month and accounted for more than half of the increase. Core CPI, which strips out volatile food and energy prices, rose 2.6% annually against a 2.5% forecast. This reading is closely watched by the Federal Reserve.
When inflation runs hot, the Fed typically raises interest rates to cool spending. The central bank already hiked rates in September to a 3.75%-4.00% range. Traders now see roughly 44% to 49% odds of another hike at its October 27-28 meeting, up from 22% before the report, according to CME FedWatch.
Higher yields on government bonds, such as the 10-year Treasury climbing to about 5.3%, compete with risk assets like Bitcoin, which pays no yield. Rising rates also make borrowing more expensive and can strengthen the dollar, draining liquidity from speculative assets. The S&P 500 fell 0.6% and the Nasdaq 0.8% on the same news.