Bitcoin faces mounting pressure from rising interest rates after US inflation data released October 14 shifted market expectations sharply toward another Federal Reserve rate hike.
September consumer prices reached 3.7% annually, up from 3.4% in August and exceeding forecasts of 3.6%. Annual core inflation, excluding food and energy, rose to 2.6% from 2.4%, also surpassing the expected 2.5%. On a monthly basis, headline CPI increased 0.6% after 0.4% in August, while monthly core CPI rose 0.3%.
The inflation report sent market expectations for an October rate hike to roughly 47%, nearly doubling from approximately 20% before the data release, according to money market pricing from LSEG.
The higher inflation reading pushed Treasury yields upward, with the two-year yield reaching 4.872%, up seven basis points on the day. The dollar also gained against a basket of currencies. Bitcoin declined to an intraday low of $81,588.88 following the release.
For cryptocurrency holders, elevated Treasury yields could create sustained pressure on Bitcoin by making interest-bearing dollar assets more attractive. This dynamic could persist even if the Federal Reserve maintains rates at their current level when the policy committee meets October 27-28.
The Fed had already raised its target range to 3.75%-4.00% on September 16. Market uncertainty remains about whether higher yields will persist through the October decision and what that means for Bitcoin's near-term trajectory.
