Bitcoin Falls to $73,525 as Inflation Raises Fed Hike Odds

By Tom Whitfield

Bitcoin fell to approximately $73,525 immediately after the October U.S. inflation report, down from about $74,200 before its release. Roughly $178 million in crypto long positions were liquidated within one hour as both headline and core readings ran 0.1 percentage point above forecasts.

Headline inflation slowed from September’s 0.6% increase, although traders had expected a larger deceleration. Core CPI registered 0.3% in October, while the stronger-than-expected readings increased the prospect of a larger Federal Reserve rate increase in December.

What does the inflation report change?

Fed Governor Christopher Waller said in London that he would support a quarter-percentage-point increase in December even if inflation improved. He also said a 0.3% core CPI reading could justify a 50-basis-point move.

“I believe a 50 basis point hike in the policy rate should be considered at the December meeting,” Waller said.

According to Reuters, financial analysts increased their estimated probability of a 50-basis-point increase to nearly 15% by midmorning. A smaller, 25-basis-point increase remained the overwhelming favorite among forecasters.

The Federal Reserve currently holds its benchmark interest rate between 3.75% and 4%. A 50-basis-point increase would lift that range to 4.25%-4.50%, raising borrowing costs across the U.S. economy.

How did markets respond?

The two-year Treasury yield recorded its biggest increase since April 2025, reflecting higher policy-rate expectations. The dollar strengthened, and U.S. equities opened lower.

Bitcoin recovered from its immediate decline toward $74,000 but remained roughly 1% lower over 24 hours. Ethereum slipped toward $2,040 during the initial selloff, while other major cryptocurrencies also faced selling pressure.

The $178 million in long-position liquidations occurred as exchanges closed leveraged trades whose collateral could no longer cover potential losses. Those forced sales can push prices lower, creating further margin requirements and additional liquidations.

Bitcoin entered the report after losing roughly 4.5% over seven days. U.S. spot Bitcoin ETFs recorded another $201 million in net withdrawals on Monday, adding institutional selling pressure before the inflation release.

What did October inflation contain?

The report showed persistent price increases across several categories:

• Food prices rose 0.5%.
• Energy prices increased 0.7%, substantially below September’s 5.2% surge.
• Shelter costs climbed 0.3% and accounted for more than 30% of the monthly headline increase.
• Recreation costs rose 0.8%, motor vehicle insurance increased 0.7%, and medical care advanced 0.3%.

The government did not publish a standard annual headline inflation rate because the 2025 federal shutdown prevented the collection of October data that year. September’s last available annual headline reading was 3.7%, above the Fed’s 2% target, which the central bank formally measures using a separate Personal Consumption Expenditures index.

Why did Bitcoin weaken despite slower inflation?

Higher Treasury yields improve the returns available from government bonds and cash, reducing the incentive to hold Bitcoin, which generates no income simply by being owned. Higher borrowing costs can also restrict the cheap funding used for speculative investments.

Bitcoin has often declined when inflation data signaled tighter Federal Reserve policy, despite its reputation as an inflation hedge. In October, the asset fell after September’s hotter-than-expected inflation report, and that selloff continued as rate-hike expectations strengthened.

The immediate test comes on December 8-9, when the Fed is scheduled to hold its final policy meeting of 2026. The next CPI report arrives on December 10, after the rate decision, leaving policymakers without November’s consumer-inflation figures as Bitcoin remains below October levels and ETF demand shows signs of weakness.