Expectations of an October Federal Reserve rate hike briefly climbed to nearly 50% following Wednesday’s inflation report, although those odds have since declined.
Bitcoin and global equity markets came under renewed pressure after U.S. inflation data released Wednesday raised concerns that the Federal Reserve might increase interest rates this month.
Bitcoin, the largest cryptocurrency by market capitalization, has fallen 1% since midnight UTC. During early Asian trading, its price approached $80,000 before recovering briefly to around $81,500. That rebound has since lost momentum, with BTC hovering near $81,000, according to CoinDesk data. The cryptocurrency is also down more than 2% over the past 24 hours.
Other major digital assets have suffered steeper declines. Ether, XRP and Solana have each dropped between 3.5% and 4%. Among the top 100 cryptocurrencies by market capitalization, PYTH is the only token still posting gains of more than 7%.
Traditional financial markets have also shifted toward a risk-averse stance. Nasdaq futures were down 1% at the time of writing, extending Wednesday’s 2% decline. South Korea’s KOSPI index plunged 8%, triggering circuit breakers designed to temporarily halt trading during sharp market moves.
Inflation figures published Wednesday showed consumer prices increased 3.7% year over year in September, accelerating from 3.4% in August and exceeding economists’ forecasts. Core consumer inflation, which excludes food and energy prices, rose 2.6%, compared with 2.4% in the previous month.
The latest figures prompted investors to reassess the likelihood of an imminent Fed rate increase. On prediction market Polymarket, the probability of an October hike briefly surged to almost 50% following the inflation release before falling to approximately 30%. CME’s FedWatch tool reflected a similar shift, with the implied probability initially rising from around 22% to nearly 47%, then easing to 26% at the time of writing.
Vikram Subburaj, chief executive of India-based cryptocurrency exchange Giottus, said the stronger inflation figures had renewed concerns that interest rates could remain elevated for longer. September’s annual inflation rate of 3.7%, he noted, has added uncertainty surrounding the Fed’s next policy decision.
Subburaj also pointed to continued weakness in institutional investment demand. U.S. spot Bitcoin exchange-traded funds recorded $150.5 million in net outflows on October 14, reversing the previous session’s $175.7 million in inflows.
Market-making firm STS Digital warned that uncertainty over the Federal Reserve’s next decision could further weaken liquidity across financial markets.
“With the next FOMC a coin flip, this uncertainty is damaging liquidity and dampening risk appetite across all asset classes,” STS Digital’s Anderson told CoinDesk in an email.
Despite the uncertainty, Anderson expects the Fed to leave interest rates unchanged this month. That view aligns with CME Fed funds futures, which indicated a probability of more than 70% that policymakers would maintain the current rate level at the time of writing.
Anderson added that digital assets have become increasingly responsive to broader economic developments despite recent optimism in the sector. Energy price shocks, volatility in fixed-income markets and concerns surrounding artificial intelligence valuations are all weighing on investor sentiment.
