Bitcoin prices dropped sharply on Thursday, extending losses from the previous session as stronger-than-expected US inflation data fueled expectations of another Federal Reserve interest rate hike before the end of the year.
The broader cryptocurrency market also remained under pressure, continuing its disappointing performance since the beginning of October.
Bitcoin declined 3.2% to $80,791.40 by 01:49 ET (05:49 GMT), approaching its lowest level since September 20. The latest downturn reflects growing concerns about tighter monetary policy and its potential impact on risk-sensitive assets.
Bitcoin Falls as US Inflation Fuels Fed Rate Hike Expectations
Bitcoin faced renewed selling pressure after the latest US Consumer Price Index (CPI) report revealed that inflation accelerated more than economists had anticipated in September.
The report also showed an increase in core inflation, suggesting that rising energy costs were spreading into other areas of the economy.
These developments strengthened expectations that the Federal Reserve could raise interest rates again before the end of 2026.
According to CME FedWatch data, traders assigned approximately a 70% probability to another 25-basis-point rate increase in December, following a similar move in September.
Meanwhile, market expectations continued to favor unchanged interest rates at the Fed’s October meeting.
The prospect of additional monetary tightening weighed heavily on cryptocurrencies, which typically face greater selling pressure when borrowing costs increase and investors become more cautious.
Technology Stock Selloff Adds Pressure to Crypto Markets
The stronger US inflation figures also triggered significant declines across global technology and artificial intelligence stocks.
Investors reassessed earnings expectations for growth-oriented companies as the possibility of higher interest rates threatened future valuations.
Consequently, the selling pressure spread across financial markets, encouraging a broader shift away from riskier investments.
Cryptocurrencies were particularly vulnerable to this change in sentiment, with Bitcoin and major altcoins experiencing substantial losses.
Higher interest rates generally make safer, interest-bearing investments more attractive compared with speculative assets such as cryptocurrencies.
As a result, expectations of prolonged monetary tightening can reduce demand for digital assets and increase market volatility.
Bitcoin ETF Outflows and Liquidations Intensify Selling Pressure
Institutional investment flows also reflected deteriorating sentiment toward Bitcoin.
Data from SoSoValue showed that US spot Bitcoin exchange-traded funds (ETFs) recorded net outflows of $261.5 million on Wednesday following the inflation report.
The withdrawals suggested weakening investor appetite for Bitcoin exposure amid renewed uncertainty surrounding Federal Reserve policy.
Meanwhile, cryptocurrency derivatives markets experienced widespread liquidations as prices declined.
According to Coinglass, approximately $966.2 million worth of cryptocurrency positions were liquidated over the previous 24 hours.
Most of these liquidations involved long positions, indicating that traders betting on rising prices were particularly affected by the market downturn.
The combination of ETF withdrawals, leveraged liquidations and growing macroeconomic concerns added further pressure to Bitcoin prices.
Altcoin Prices Tumble as Cryptocurrency Market Weakens
The broader cryptocurrency market followed Bitcoin lower on Thursday, with several major digital assets recording significant declines.
Ethereum (ETH), the world’s second-largest cryptocurrency by market capitalization, dropped 5.7% to $2,360.53.
XRP also experienced substantial selling pressure, declining 4.7% as investors reduced exposure to riskier assets.
Elsewhere, Solana (SOL) fell 4.8%, while Cardano (ADA) recorded a steeper 6% decline. BNB weakened 3.5% during the session.
Meme cryptocurrencies were similarly affected by the broader market downturn.
Dogecoin (DOGE) declined 5.6%, while the TRUMP token suffered a sharper 7% drop.
The widespread losses highlighted how strongly cryptocurrency valuations remain influenced by US economic data and changing expectations for monetary policy.
Bitcoin Outlook Remains Sensitive to Federal Reserve Policy
Bitcoin’s latest decline underscores the challenges facing cryptocurrency investors as inflation concerns return to financial markets.
Although expectations currently favor unchanged interest rates in October, the possibility of another Federal Reserve hike in December remains a significant source of uncertainty.
Investors will likely continue monitoring upcoming US economic indicators, Treasury yields and Federal Reserve commentary for clues about the direction of monetary policy.
For now, Bitcoin and the wider cryptocurrency market remain vulnerable to further volatility as traders reassess the outlook for inflation, interest rates and global risk appetite.
