Bitcoin extended its recent decline on Tuesday, slipping about 2% after a hotter-than-expected US inflation report strengthened the case for further Federal Reserve rate hikes. The digital asset traded at $73,612 by 14:27 GMT, down from Monday's close of $75,223, as investors digested the latest consumer price index data.
Inflation Data Beats Expectations
The US Bureau of Labor Statistics reported that the headline CPI rose 0.4% month-over-month in October, exceeding the Dow Jones consensus estimate of 0.3%. Core CPI, which excludes food and energy, also came in above forecasts, climbing 0.3% against the expected 0.2%. The annual inflation rate was not published due to the government shutdown that disrupted data collection last year.
The stronger-than-expected inflation numbers have reinforced market expectations that the Fed will maintain its aggressive tightening stance. According to CME Group's FedWatch tool, traders are now fully pricing in a 25-basis-point rate hike at the December 8-9 meeting, with a 14.7% probability of a larger 50-basis-point move.
Market Reaction and Fed Commentary
Following the CPI release, Treasury yields and the US dollar surged. The 10-year yield jumped to 4.956%, up from 4.864% on Monday, while the 2-year yield climbed more than 15 basis points to 4.698%. The US dollar index rose 0.4% to near 102.01, adding pressure on risk assets like cryptocurrencies.
Fed Governor Christopher Waller, speaking earlier in the day, indicated he was leaning toward a 25-basis-point hike in December. However, he noted that if core CPI came in around 0.3% or higher, a 50-basis-point increase should be considered. His comments, combined with the inflation data, have heightened expectations of a more aggressive Fed.
ETF Outflows Add to Headwinds
Institutional flows have also been a drag on bitcoin. US spot bitcoin ETFs recorded $201 million in net outflows on Monday, marking the third consecutive session of withdrawals, according to Farside Investors. BlackRock's iShares Bitcoin Trust led the redemptions, with total outflows over the past seven sessions reaching approximately $2.13 billion.
These outflows suggest that institutional investors are reducing their exposure amid the uncertain macroeconomic environment and rising rate hike odds.
Altcoins and Market Outlook
Other major cryptocurrencies also suffered losses. Ether fell 3.4% to $2,060, XRP dropped 3.6% to $1.057, and Solana declined 3.5% to $83.53. The broader crypto market remains under pressure as risk appetite wanes.
Bitcoin has so far held above the $73,000 level following the CPI release, but the near-term outlook remains cautious. Producer price data is due on Friday, and US bond markets will be closed on Wednesday for Veterans Day, which could thin liquidity and amplify volatility.
Today's drop continues recent weakness rather than standing as a CPI-only crash, with ETF outflows and hike bets already weighing on prices before the data. Investors are closely monitoring whether bitcoin can maintain support above $73,000 or if further declines are in store.
This article is for informational purposes only and does not constitute financial advice.
