Bitcoin extended its decline over the past 24 hours, falling more than 3% after US inflation data came in hotter than expected, unsettling financial markets and reinforcing expectations of further Federal Reserve tightening. The cryptocurrency slipped over 1% immediately following the Consumer Price Index (CPI) release, as traders recalibrated their rate outlook.
The headline CPI surged to 3.7% year-over-year from 3.4%, while consumer prices rose 0.6% on a monthly basis. A 9.1% jump in gasoline prices accounted for much of the monthly increase. Core inflation, which excludes volatile food and energy costs, stood at 2.6% annually. These figures intensified concerns that inflation could remain sticky, limiting the Fed's flexibility to ease monetary policy.
For Bitcoin, the immediate market reaction added macroeconomic pressure to an already fragile technical setup. The digital asset now faces a more challenging environment as Treasury yields firm and the US Dollar Index strengthens, both of which can weigh on risk assets.
Fed rate hike odds climb above 50%
The inflation release prompted a sharp adjustment in interest rate expectations. CME FedWatch data shows the probability of a 25-basis-point increase at the October 28 Federal Open Market Committee meeting rose above 50%, up from about 20% earlier in the week. Those probabilities reflect market pricing at the time of the report and can change as new economic information emerges.
Expectations for rate cuts before year-end also weakened. The next policy decision consequently became more closely balanced between leaving rates unchanged and delivering another increase. Meanwhile, US 10-year Treasury yields firmed, making interest-bearing assets more attractive, while a stronger dollar can dampen demand for cryptocurrencies.
Bear flag pattern signals further downside
Beyond the macro headwinds, Bitcoin's four-hour BTC/USDT perpetual chart shows a potential bearish continuation pattern. The setup followed a decline from approximately $86,000 to $81,000. Bitcoin subsequently consolidated inside a narrow, upward-sloping channel, forming what is known as a bear flag.
BTC has broken below the channel's lower boundary near $82,371. It is also trading below its 20-period exponential moving average (EMA) at $83,196 and its 50-period EMA at $83,384. These moving averages form an overhead resistance zone that buyers need to overcome to improve short-term momentum. Repeated rejection around that area would leave the bearish structure intact and increase attention on lower support levels.
The bears pushed below the support formed at the four-hour 200-period EMA near $82,046. A daily candle close below this support has exposed the psychologically important $80,000 threshold to a potential test. Momentum indicators offer limited reassurance for buyers: the 14-period Relative Strength Index stands at 43 and is pointing lower, indicating weak momentum without an oversold reading.
Using the bear flag's measured-move method, Bitcoin could continue its decline, with a downside target near $78,218. Buyers would first need to recover the resistance area around $83,196–$83,384 to challenge the immediate bearish momentum. A move above approximately $83,400, followed by a push through $84,000, would weaken the bear flag setup. A daily close above $84,000 would provide stronger evidence of a recovery and shift attention toward the earlier local peak near $86,000.
Until those levels are reclaimed, Bitcoin remains exposed to further downside if inflation concerns continue to weigh on broader markets. The broader crypto market has also felt the strain, with significant liquidations hitting leveraged long positions as prices slipped below key thresholds.
This article is for informational purposes only and does not constitute financial advice.
