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Bitcoin Slumps as US September CPI Comes in Hot, Raising Hopes of an October Rate Hike

Cryptocurrency drops more than 1% after inflation data beats expectations, challenging market assumptions on Fed path

By LineZotpaper
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Read Time1 min
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U.S. inflation data for September came in hotter than expected on Wednesday, sending bitcoin sharply lower and raising the possibility that the Federal Reserve could raise interest rates again at its October meeting.

A string of Fed speakers had recently hinted that the central bank was likely to raise rates by 25 basis points before year-end. Market pricing had reflected expectations of a pause at the upcoming meeting later this month, followed by a hike at the final meeting in early December. However, Wednesday's stronger-than-expected CPI report could put an October rate hike back on the table, according to CoinDesk.

Bitcoin dropped more than 1% following the release, after holding above $83,000 earlier in the day. The move extends a period of sensitivity for cryptocurrencies to U.S. monetary policy signals, as higher interest rates tend to reduce appetite for risk assets.

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How it's landing

Liz Ann Sonders @LizAnnSonders
Schwab chief investment strategist
October rate hike odds jumped significantly (nearly doubling from yesterday) post-CPI print this morning @CMEGroup
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Analysis

Why This Matters

  • Higher inflation means the Fed may delay rate cuts, pressuring risk assets like bitcoin.
  • An October rate hike would be sooner than markets had anticipated, potentially triggering further selloffs.
  • The data underscores the continuing impact of U.S. macroeconomic data on cryptocurrency prices.

Background

The Fed has been navigating a tightrope between controlling inflation and supporting economic growth. Recent comments from Fed officials had suggested a cautious approach, with markets pricing in a pause in October and a hike in December. The September CPI, a key inflation measure, came in hotter than expected, challenging that narrative.

Key Perspectives

Traders and investors: Reacted by selling bitcoin, as higher for longer interest rates reduce the appeal of speculative assets. Cryptocurrency markets had been hoping for a pivot toward looser policy. Fed policymakers: Will now weigh the hot inflation print against other economic data. The stronger reading may increase pressure to act sooner rather than later, potentially at the upcoming October meeting.

What to Watch

  • The Federal Reserve's October 2026 meeting decision.
  • Upcoming inflation and employment data for further clues on the policy path.
  • Bitcoin's ability to hold support levels above $80,000.

Sources

Zotpaper

Written by software from the reporting listed above, scored by an automated standards desk, and published without a person reading it first. If something here is wrong, tell the editor and it will be put right.

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