Bitcoin lost 4% over 24 hours, while Ethereum declined around 6.5% as hotter U.S. inflation and a global technology-stock sell-off pressured risk assets. The latest losses have renewed debate over Bitcoin’s role in financial markets, particularly whether it behaves more like a high-risk investment than a hedge when interest rates and funding costs come under scrutiny.
September’s Consumer Price Index increased 0.6% from the previous month and 3.7% year over year. Core CPI, which excludes food and energy prices, advanced 0.3% monthly and 2.6% annually. Gasoline prices climbed 9.1%, accounting for more than half of the headline monthly inflation increase.
The inflation report also revived concerns about a potential Federal Reserve rate hike at its October 27–28 meeting. CME FedWatch briefly put the probability of a rate increase on October 28 at 31.6%, compared with 22.1% a day earlier. Later market pricing, however, indicated a 75% chance that the Fed would keep interest rates unchanged.
The changing outlook for monetary policy weighed on cryptocurrencies because interest rates affect borrowing costs, liquidity and investors’ appetite for assets valued on expectations of future growth. Bitcoin was already facing scrutiny over its response to inflation reports and the strength of nearby technical support levels.
Traditional financial markets also suffered losses. The S&P 500 declined 1.1%, while the Nasdaq Composite fell 1.9%. A semiconductor-stock index extended its decline for a sixth consecutive trading session, highlighting the growing pressure on technology-related investments.
Asian equities followed the downward trend. South Korea’s KOSPI plunged 8%, and Japan’s Nikkei 225 dropped 4.8%. Samsung Electronics shares fell 9.3%, while SK Hynix and Kioxia each declined more than 11%. SoftBank also slid 9.4%.
Why Is Crypto Down Today?
Bitcoin fell 4% as stronger U.S. inflation intensified concerns about possible Federal Reserve rate increases, weighing on digital assets and technology shares across global markets.
AI-focused companies such as Oracle and CoreWeave faced renewed pressure as investors reassessed the impact of higher financing costs. Technology supply-chain stocks also experienced heavy selling. Ethereum’s larger decline relative to Bitcoin suggests that more volatile cryptocurrency assets faced greater pressure during the market downturn.
The market reaction reflects a broader macroeconomic pattern: accelerating inflation briefly strengthened rate-hike expectations, encouraging investors to reduce exposure to technology stocks and other risk-sensitive assets. Saxo Bank strategist Charu Chanana described the equity sell-off as a reassessment of capital costs, with investors questioning the valuations of AI-related businesses amid elevated and volatile borrowing expenses.
JPMorgan analysts also pointed to financing risks and IPO timelines as major considerations for the AI investment theme. These concerns help explain the weakness in AI-linked stocks. For cryptocurrency markets, the more likely explanation is that the inflation surprise shifted attention back to monetary policy and contributed to a wider retreat from risk assets.
The bond market offered a different signal. The 10-year U.S. Treasury yield fell 7.8 basis points to 5.110% as investors sought government bonds during the equity sell-off. Reuters linked the decline to safe-haven demand and concerns about slowing economic growth. The move indicates that investors were not simply adjusting all asset prices in response to expectations of higher yields.
Investors are now watching speeches from Federal Reserve officials, U.S. producer price data and retail sales figures for additional clues about the policy outlook. If upcoming economic releases or central bank comments strengthen expectations of an October rate hike, technology stocks and more volatile cryptocurrencies could remain under pressure.
If the probability of the Fed holding rates steady remains around 75%, attention may shift toward a potential recovery in technology shares and Bitcoin’s ability to rebound from approximately $80,764.
Taiwan Semiconductor Manufacturing Company’s third-quarter earnings, due later in Thursday’s Asian trading session, will provide another indication of investor confidence in the AI hardware sector. However, the Federal Reserve’s October 27–28 meeting remains the central event for markets assessing the direction of U.S. monetary policy.
