Bitcoin falls below $82K after US inflation tops 3.6% forecast

Consumer prices in the US came in higher than expected in September, pushing Bitcoin down by roughly $1,000 to $82,800 and stoking fears that the Federal Reserve may consider hiking interest rates once again at its upcoming monetary policy meeting in late October.

The figures that rattled the markets

According to the Bureau of Labor Statistics, the annual rate of inflation amounted to 3.7% in September, compared to 3.4% in August. One expert commented that the figure was above the 3.6% that experts had expected. The monthly change in the headline CPI stood at 0.6%, in line with expectations and compared to 0.4% in August.

It is the core CPI, however, that is the one measure that really spooked the market. The core CPI increased by 0.3% on a monthly basis and 2.6% on an annualized basis. Both figures were above the 0.2% and 2.5% that analysts had predicted.

Energy did the heavy lifting

Gasoline prices were the stars in September, rising by 9.1%, contributing more than half of the September CPI rise. The energy index increased by 5.2%, whereas the cost of shelter increased by 0.4%, and food prices did not change.

In any case, the detailed information indicated the spread of inflation. The prices of used vehicles, airfares, recreation, education, and health care services experienced hikes. The reason for the disappointment was the core price gauge.

In addition, before the release of the inflation figures, Bitcoin price was relatively high. Bitcoin briefly reached $84,000 at 08:00 UTC and traded around $83,450 in Europe in the morning after dropping to $80,970 on Tuesday. This news took the price about $1,000 lower.

Bonds suffered the most: 10-year Treasury yield rose by 9.3 basis points to 5.308%, and the 2-year yield grew by 13.1 basis points to 4.924%. Moreover, equity futures decreased by 0.65% for the Nasdaq 100 futures and 0.3% for the S&P 500 futures. The gold price reduced by 1.5% to $4,116 an ounce.

Bitcoin price dropped by more than 2% in the last 24 hours. BTC is trading at an average price of $81,650 at the press time. Ether price took a dip of around 3.5% in the same time.  ETH is trading at around $2,429 at the press time.

What it means for the Fed

This report comes ahead of the FOMC policy meeting to be held on October 27-28, the last inflation report before that meeting. Prior to the report, a number of members of the Federal Reserve had indicated that a quarter percentage point increase was expected before the end of this year, while the markets were expecting a pause this month and then an increase in December.

Higher readings have made all the difference. According to Alpher, the September figures “might just put an October rate hike back on the table”. This goes against what Fed Chair of New York, John Williams, had indicated about no further rate hikes being needed in 2027.