Bitcoin slips below $81,000 as Fed rate uncertainty grips markets

Bitcoin traded below $81,000 on Thursday as stronger-than-expected US inflation data revived concerns that the Federal Reserve could raise interest rates this month, pressuring crypto and traditional markets alike.

The largest cryptocurrency by market value was down about 1% since midnight UTC, CoinDesk data show, having dipped close to $80,000 in early Asian trading before briefly rebounding to roughly $81,500. It is down more than 2% over 24 hours. Ether, XRP and solana fell between 3.5% and 4%, with PYTH the only top-100 token still up more than 7%.

Risk aversion spread across traditional markets. Nasdaq futures were down 1%, extending Wednesday's 2% decline, while South Korea's KOSPI plunged 8% and triggered circuit breakers. Data released on Wednesday showed consumer prices rose 3.7% in the 12 months through September, up from 3.4% in August and above economists' expectations, while core CPI accelerated to 2.6% from 2.4%.

Markets repriced the odds of a Fed move. On prediction platform Polymarket, the probability of an October rate hike briefly spiked to nearly 50% after the CPI release before easing to about 30%, while CME's FedWatch tool showed odds initially jumping to almost 47% from roughly 22% before retreating to 26%.

Vikram Subburaj, chief executive of India-based exchange Giottus, said stronger US inflation data had renewed concerns that interest rates will stay higher for longer, adding that institutional demand remains fragile and citing $150.5 million in outflows from US spot Bitcoin ETFs on October 14, reversing the previous day's $175.7 million inflow. Market-making firm STS Digital said the uncertainty could weigh on liquidity across markets, with its Anderson telling CoinDesk that a coin-flip FOMC is damaging liquidity and dampening risk appetite across all asset classes, though he expects the Fed to hold rates steady this month.