Bitcoin Plunges Below $82K Amid High Oil Prices and US CPI Inflation
Key Summary
Bitcoin's price dropped below $82,000 as high oil prices and US CPI inflation surprised markets, leading to a spike in bond yields and a decrease in gold prices. The US Bureau of Labor Statistics confirmed a 3.7% year-on-year increase in CPI, with core CPI also rising 0.1% higher than anticipated. This has led to a shift in market expectations, with the majority now favoring a 25-basis-point interest-rate hike at the Fed's upcoming meeting on Oct. 28.
Bitcoin Price Drops Below $82,000
Bitcoin's price fell below $82,000 after US CPI inflation data confirmed a 3.7% year-on-year increase in Consumer Price Index (CPI).
Market Reaction to CPI Data
The data from the Bureau of Labor Statistics showed that CPI increased 0.1% higher than anticipated at 2.6% year-on-year.
The increase in fuel prices around the Middle East conflict and oil-supply crisis was conspicuous.
“The index for gasoline rose 9.1 percent in September, accounting for over half of the monthly all items increase,” an official release stated.
Inflation nonetheless increased across the board, as core CPI — the index minus energy and food — also came in 0.1% higher than anticipated at 2.6% year-on-year.
Shift in Market Expectations
Commenting, Sonu Varghese, chief macro strategist at Carson Group, suggested that elevated figures should be a foregone conclusion.
“The only surprise is that investors keep getting surprised by broad-based inflation. And we’ve yet to see the full impact of higher diesel prices and the AI boom,” he told CNBC.
The latest data from CME Group’s FedWatch Tool showed markets adjusting expectations of Federal Reserve policy as a result of the data.
The majority now favored a 25-basis-point interest-rate hike at the Fed’s upcoming meeting on Oct. 28, with the odds of that outcome at 53.7% versus 22.1% the day prior.
Bitcoin price action continued to circle a key area between $82,500 and $83,400, with analysis still waiting for the market to make a decision on its status as support.
Conclusion
Gold fell as low as $4,079 per ounce on the back of the CPI result, while US bond yields spiked. Related: CryptoQuant’s 3 charts keeping Bitcoin’s ‘Uptober’ thesis valid The 10-year yield, highly sensitive to energy-price triggers, hit 5.329%, around three basis points off new 24-year highs.