Bitcoin Slides Below $74,000 as Hot CPI Reading Revives 50-Basis-Point Fed Bets

Bitcoin dropped to roughly $73,525 on Tuesday after U.S. consumer prices rose 0.4% in October, beating forecasts of 0.3% for the third consecutive month. The print landed hours after Fed Governor Christopher Waller said a 50-basis-point December rate hike "should be considered," and analysts pushed the odds of that larger move to nearly 15% by midmorning, according to Reuters.

Within an hour of the Bureau of Labor Statistics release, exchanges liquidated approximately $178 million in leveraged crypto long positions. Liquidations occur when borrowed-money trades lose enough collateral that exchanges force them closed, and those forced sales can cascade into further losses. Ethereum slipped toward $2,040 in the initial selloff, and other major altcoins sold off alongside it.

Bitcoin was trading near $74,200 before the data dropped. It recovered some ground toward $74,000 but stayed roughly 1% lower over 24 hours.

The damage started before Tuesday. Bitcoin had already lost about 4.5% over seven days, and U.S. spot Bitcoin ETFs recorded another $201 million in net withdrawals on Monday. Institutional demand, in other words, was already wobbling when Washington handed traders another reason to sell.

What does the inflation report actually say?

Headline CPI rose 0.4% in October, above the 0.3% economists expected. Core CPI, which strips out food and energy, climbed 0.3% against a 0.2% forecast — matching September's reading for a third straight month. Both figures missed projections by exactly 0.1 percentage points.

Headline inflation did slow from September's 0.6% increase. That offered little comfort. Traders had expected a bigger cooldown.

The detail beneath the headline was broad. Food prices rose 0.5%, energy gained 0.7%, and shelter costs climbed 0.3%, together accounting for more than 30% of the monthly increase. Energy inflation cooled sharply from September's 5.2% surge, but services inflation stayed stubborn: recreation costs rose 0.8%, motor vehicle insurance gained 0.7%, and medical care increased 0.3%.

One wrinkle: the government did not publish its standard annual inflation rate. The 2025 federal shutdown prevented collection of that year's October data. The last available annual headline reading, from September, stood at 3.7% — well above the Fed's 2% target, which is formally measured on a separate index, Personal Consumption Expenditures.

Why does a hot CPI hit crypto this hard?

Higher inflation usually means higher rates. Higher rates mean government bonds and cash pay attractive returns, which weakens the case for holding volatile assets like Bitcoin that yield nothing by sitting in a wallet. Tighter policy also drains the cheap-money pool that funds speculative positioning. So the market's "inflation hedge" reputation keeps colliding with its rate-sensitivity in practice.

Waller sharpened the stakes on Monday. Speaking in London, he said he would back a quarter-point increase in December even if inflation improved, and warned that another 0.3% core reading could justify more. October's print hit precisely that threshold.

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

The Fed currently holds its benchmark rate between 3.75% and 4%. A 50-basis-point move would lift the range to 4.25%-4.50%, raising borrowing costs across the economy. Markets repriced fast: the two-year Treasury yield, which tracks Fed policy expectations closely, posted its biggest increase since April 2025, the dollar strengthened, and U.S. stocks opened lower.

What changes for crypto heading into December?

The market has been here before. In October, Bitcoin fell after September's hotter-than-expected report, and the selloff deepened as rate-hike expectations firmed. This time the setup is weaker: Bitcoin enters the December meeting well below its October levels, ETF flows are negative, and institutional appetite shows visible cracks.

The calendar adds a twist. The Fed's final policy meeting of 2026 runs December 8-9, and the next CPI report arrives December 10 — meaning policymakers will set the December rate without seeing November's consumer inflation figures. Unless inflation cools or risk appetite returns, higher Treasury yields will keep weighing on any sustained Bitcoin recovery, with the December 8-9 meeting as the next hard deadline for the market to price.