Bitcoin fell on Thursday, extending overnight losses after US consumer inflation data came in higher than expected, reinforcing expectations that the Federal Reserve will raise interest rates again this year.
Cryptocurrency prices also declined more broadly, continuing their losses following a weak start to October.
Bitcoin fell 3.2% to $80,791.40 by 8:49 a.m., nearing its lowest level since September 20.
Bitcoin falls under the weight of high inflation and interest rate hike expectations
Bitcoin fell sharply overnight following the release of US consumer price index data for September, which came in higher than expected.
The data also revealed a rise in the core inflation index, as the repercussions of higher energy costs spread to the wider economy.
Consumer price index data has fueled concerns that the Federal Reserve will raise interest rates again at least once before the end of the year, which is putting pressure on speculative assets such as cryptocurrencies.
Markets priced in a 70% probability that the Federal Reserve would raise interest rates by an additional 25 basis points in December, following a similar increase in September. CME FedWatch data indicated that expectations of a rate hold in October remained unchanged.
Consumer price index data triggered a sharp sell-off in global technology and artificial intelligence stocks, as investors lowered their estimates for the sector's future earnings amid rising interest rates.
This wave of selling led to a widespread wave of caution in the financial markets, the repercussions of which extended to the cryptocurrency market.
Capital flows into Bitcoin spot exchange-traded funds (ETFs) turned negative on Wednesday following the release of consumer price index data, with SoSoValue data showing outflows of $261.50 million.
Coinglass data showed that cryptocurrency positions totaling $966.20 million were liquidated in the past 24 hours, most of which were buy positions.
Cryptocurrency prices today: Altcoins decline amid rising interest rate concerns
Cryptocurrency prices fell more broadly on Thursday, following Bitcoin's losses, as expectations of rising interest rates weighed on speculative assets such as cryptocurrencies.
Higher interest rates tend to damage cryptocurrency valuations, as they direct capital towards safer, higher-yielding debt instruments rather than speculative assets.
Ether, the world's second-largest cryptocurrency, fell 5.7% to $2,360.53, while XRP dropped 4.7%.
Solana fell by 4.8%, Cardano by 6%, and BNB lost 3.5%.
As for the meme Dogecoin and $TRUMP currencies, they declined by 5.6% and 7% respectively.
