Bitcoin dipped below $81,000 on Thursday, extending losses following higher-than-expected U.S. inflation data that reignited speculation about another Federal Reserve rate hike.
The leading cryptocurrency traded at $81,002 per CoinGecko data, down 2.7% over the past 24 hours and 2.5% over the past week, after slipping to an intraday low of $80,444.
Inflation Pressures and Rate Hike Odds
U.S. consumer prices rose 3.7% in the year to September, with a 0.6% monthly increase—the largest monthly gain in five months, driven largely by energy costs. Following the report, traders' odds of a Fed rate hike this month jumped to 43% from 24%, though federal funds futures still point to December for the next increase. The Fed raised rates to a range of 3.75% to 4% in September.
CME FedWatch put the odds of an October hike at 29.3% on Thursday, up from 17.7% a week earlier. Inflation has now exceeded the Fed's 2% target for 66 consecutive monthly readings, the longest streak this century.
Structural Shifts in Bitcoin Demand
Tim Sun of HashKey Group attributed Bitcoin's stalled rally to shifting capital dynamics rather than macro factors alone. Over the past two years, spot exchange-traded funds and corporate Bitcoin treasuries have been the primary marginal buyers, Sun said. As borrowing costs rise, narrowing valuation premiums at some corporate treasuries have made it less attractive to raise capital for Bitcoin purchases.
Despite these headwinds, Bitcoin has not experienced a sustained deep sell-off, Sun noted, citing growing involvement from major traditional banks adding long-term capital to the market.
Trading Range Expectations
Stephen Wundke of quantitative investment firm Algoz expects Bitcoin to trade between $76,000 and $83,000 for the remainder of October absent a clear catalyst. A breakout above this range would depend on whether ETF flows return to sustained net inflows and whether corporate treasuries improve their ability to raise money, Sun said.
In the near term, Bitcoin is trading as a liquidity asset, according to market observers. The Federal Reserve will announce its next rate decision on October 28.
