Bitcoin Gives up $82,000 as Hot US CPI Sends Bonds Toward New Highs

Bitcoin (BTC) fell below $82,000 after Wednesday’s Wall Street open as US consumer inflation beat expectations.

Key points:

• Bitcoin dropped to $81,926 on Bitstamp after US September CPI inflation came in at 3.7% versus expectations of 3.6%.
• Fuel-price increases accounted for the lion’s share of the gain at 9.1% year-on-year.
• US bond yields spiked on the news, while gold fell to $4,079 per ounce.

Bitcoin slips under $82,000 on higher US CPI print

Data from TradingView showed crypto, gold and stock-market futures dropping after the release of Consumer Price Index (CPI) for September.

BTC/USD one-hour chart. Source: Cointelegraph/TradingView

At 3.7% year-on-year, this came in 0.1% above majority market consensus, data from the Bureau of Labor Statistics (BLS) confirmed. 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. The energy index increased 5.2 percent over the month following a 2.1-percent increase in August,” an official release stated.

US CPI 12-month % change. Source: BLS

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.

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. For December, meanwhile, the odds of a second 25-basis-point hike stood at 50%.

Fed target-rate probabilities for October FOMC meeting (screenshot). Source: CME Group

“Taken in combination with the soft payroll numbers in the September employment report, the FOMC is probably on hold for any rate moves at the upcoming October 27-28 meeting although with a definite bias toward a hike in December,” said Theresa Sheehan, economic analyst at Econoday.

As Cointelegraph reported, the next key US inflation data release, the September print of the Producer Price Index (PPI), is due on Friday.

Analysis: High CPI “last thing global bond markets needed”

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.

“This is the last thing global bond markets needed. Prior to this number, it looked like the global bond sell-off was calming, but now bond markets are catching on fire again,” economist Robin Brooks wrote in a blog post.

US 10-year bond yield one-hour chart. Source: Cointelegraph/TradingView

BTC 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.