Bitcoin, the broader cryptocurrency market, and global equities faced selling pressure following a higher-than-expected US inflation reading. Bitcoin slipped below $81,000, while Ethereum fell nearly 6% to around $2,367 as investors reassessed exposure to risk-sensitive assets.
The September Consumer Price Index rose 3.7% year-over-year, up from 3.4% in August and above expectations of 3.6%. Core inflation reached 2.6% annually compared to 2.4% in August, while core CPI increased 0.3%, surpassing expectations of around 0.2%. Rising energy costs contributed significantly to the headline increase, with gasoline prices jumping 9.1% during September.
Global Market Reaction
US equities declined during Wednesday's trading session, with the Nasdaq Composite falling 1.88% and the S&P 500 declining 1.1%. Technology and artificial intelligence-focused stocks led the losses.
The sell-off intensified across Asian markets. South Korea's KOSPI plunged 8% and triggered a circuit breaker, while Japan's Nikkei 225 dropped approximately 5%.
Cryptocurrency Market Deterioration
The cryptocurrency market experienced broad-based losses beyond major coins. Bitcoin dropped around 3% over 24 hours, while several altcoins traded sharply lower. Zcash fell more than 12%, and NEAR Protocol and Cardano also faced heavy selling pressure.
Cryptocurrency liquidations intensified the downturn, with nearly $960 million in crypto positions liquidated over 24 hours. Long positions accounted for more than 90% of the total liquidations. Ethereum alone saw approximately $289 million in liquidations, primarily from traders who had bet on rising prices.
Recent outflows from US spot Bitcoin and Ethereum exchange-traded funds pointed to weaker institutional demand, adding to the cautious market sentiment.
Market Outlook
The sell-off demonstrates how quickly investor sentiment can shift when inflation raises concerns about interest rate policy. The next market move will depend largely on whether selling pressure eases or investors continue reducing exposure to riskier assets.
Financial markets are now reassessing the likelihood of interest rate decreases in light of the inflation data. Traders and investors are monitoring institutional flows and cryptocurrency liquidations for signals indicating whether the decline will intensify or whether markets may recover.
