Bitcoin Falls as Hot US Inflation Fuels Fears of Bigger Fed Rate Hike

Bitcoin fell below $74,000 on Tuesday after U.S. inflation came in hotter than expected for the third consecutive month, adding fresh pressure to a crypto market already struggling with falling prices and investor withdrawals.

The Consumer Price Index rose 0.4% in October, above economists' forecasts of 0.3%, according to data released by the Bureau of Labor Statistics. Core CPI, which strips out food and energy prices, climbed 0.3% against expectations of 0.2%, matching September's reading for the third consecutive month.

Headline inflation actually slowed from September's 0.6% increase, but that offered little relief to traders who had expected a bigger slowdown. Both figures exceeded forecasts by 0.1 percentage points, giving the Federal Reserve another reason to keep interest rates elevated.



Bitcoin was trading near $74,200 before the announcement and briefly dropped to approximately $73,525 immediately afterward. The cryptocurrency recovered some ground toward $74,000 but remained under pressure, trading roughly 1% lower over 24 hours.

Ethereum also weakened, slipping toward $2,040 during the initial selloff, while other major altcoins faced selling pressure. Approximately $178 million in crypto long positions were liquidated within an hour of the announcement.

Liquidations happen when exchanges automatically close trades made with borrowed money because their owners no longer have enough collateral to cover potential losses. Those forced sales can push prices even lower, triggering further liquidations.

Bitcoin was already having a difficult week. The asset had lost roughly 4.5% over seven days, while U.S. spot Bitcoin ETFs recorded another $201 million in net withdrawals on Monday, extending the selling pressure that preceded the inflation report.

Why the CPI report matters for crypto

Higher inflation usually means higher interest rates, and higher interest rates tend to be bad news for crypto. When government bonds and cash offer attractive returns, investors have less incentive to hold volatile assets such as Bitcoin, which generate no interest simply by being held.

Higher borrowing costs also reduce the availability of cheap money for speculative investments. That's why Bitcoin, despite its reputation as an inflation hedge, frequently falls when inflation data suggests the Fed will tighten monetary policy.