Bitcoin falls below $82,000 as hotter core CPI revives Fed hike concerns

Bitcoin's value dipped under $82,000 amid a surge in U.S. consumer price index (CPI) inflation. Following Wednesday's opening on Wall Street, Bitcoin (BTC) fell below $82,000 as U.S. consumer inflation exceeded expectations. TradingView data indicated that cryptocurrency, gold, and stock-market futures declined after the release of September's Consumer Price Index (CPI).

BTC/USD one-hour chart sourced from Cointelegraph and TradingView. The year-on-year increase in CPI reached 3.7%, which was 0.1% higher than the majority market consensus, according to data from the Bureau of Labor Statistics (BLS). This rise in fuel prices due to the conflict in the Middle East and the oil supply crisis contributed significantly.

The gasoline index increased by 9.1% in September, accounting for more than half of the monthly all-items increase, while the energy index rose by 5.2% over the month after a 2.1% increase in August. Core CPI, which excludes energy and food, also increased by 0.1% year-on-year, coming in 0.1% higher than expected at 2.6%. Sonu Varghese, Carson Group's chief macro strategist, noted that these figures were not surprising, stating that investors continue to be surprised by broad-based inflation.

CME Group's FedWatch Tool reflected market adjustments to the data, with the majority now favoring a 25-basis-point interest rate hike at the Federal Reserve's upcoming meeting on October 28, with odds at 53.7%, compared to 22.1% the day before. For December, the odds of a second 25-basis-point hike stood at 50%. Fed target-rate probabilities for October FOMC meeting (screenshot) sourced from CME Group.

The combination of soft payroll numbers in the September employment report and the CPI data suggests that the Federal Open Market Committee (FOMC) might hold off on any rate changes at the upcoming October 27-28 meeting, although there is a clear inclination toward a hike in December. Theresa Sheehan, an economic analyst at Econoday, commented on this.

The upcoming key U.S. inflation data release, the September print of the Producer Price Index (PPI), is scheduled for Friday. Gold plummeted as low as $4,079 per ounce following the CPI result, while U.S. bond yields surged. Related: CryptoQuant's 3 charts keeping Bitcoin's ‘Uptober’ thesis valid. The 10-year yield, highly sensitive to energy-price triggers, reached 5.329%, which is nearly three basis points away from new 24-year highs.

Economist Robin Brooks wrote in a blog post that this is precisely what global bond markets didn't need. Prior to this number, it appeared that the global bond sell-off was calming, but now bond markets are experiencing renewed volatility.