The cryptocurrency market experienced a notable decline, with total market capitalization falling to $2.82 trillion, down nearly $90 billion over 24 hours. Bitcoin extended a 48-hour downturn to more than 4%, trading near $81,700, while Ethereum and XRP faced continued downward pressure. The Fear & Greed Index retreated to Neutral at 50, down from 68, signaling a sharp reversal in market sentiment.
Macro Pressures: Japanese Inflation and Rate Expectations
Japan's annual inflation rate accelerated to 2.1% in September 2026, up from 1.9% in the previous two months and marking the highest level since December 2025. Core inflation climbed to 2.1% from 1.7% in August, exceeding the Bank of Japan's 2% target for the first time in nine months.
The inflation data reinforced expectations for monetary tightening. The Bank of Japan recently raised interest rates from 1% to 1.25% and is widely anticipated to leave rates unchanged in October, though another rate hike in December carries high odds. The Japanese yen strengthened toward 156 against the US dollar on Friday, reaching its highest level in five weeks.
Broader market pressures also emerged, with the US dollar index climbing to 101.83 and Brent crude oil prices surpassing $113 amid Middle East tensions. Gold prices briefly dropped below $4,000 on Friday, the lowest levels in nearly three months.
Tech Sector Weakness Triggers Risk-Off Sentiment
The US 10-year Treasury yield climbed around 4.98% on Friday after falling more than 10 basis points in the previous session. Renewed doubts about returns and capital expenditure levels in artificial intelligence and technology stocks prompted deeper selloffs in Meta, Nvidia, AMD, and SpaceX, driving investors toward safer assets including government bonds.
The crypto market reacted sharply to weakness in tech equities. Institutional and retail investors sold spot Bitcoin ETFs and crypto ETFs, with BlackRock's IBIT experiencing a $254.1 million selloff and Fidelity's FBTC recording $217.5 million in redemptions. Spot Bitcoin ETFs saw $635.6 million in net outflows on Thursday, reversing solid inflows from earlier in the week.
Spot Ethereum ETFs recorded total net outflows of $111 million on Thursday, while spot Solana ETFs saw $2.65 million in outflows. XRP ETFs continued to record inflows, posting $3.55 million on the same day.
Options Expiry Adds to Market Volatility
Approximately $1.31 billion in Bitcoin options and $250 million in Ethereum options expired on the day, adding to market volatility. The Bitcoin put/call ratio stood at 1.03 with a max pain price of $82,000, while Ethereum's ratio was 1.22 with max pain at $2,450.
Bitcoin traded below its 50-day moving average at $81,835. The monthly crypto market expiry scheduled for the following week is expected to be a significant event for traders, with a max pain level of $78,000.
