Bitcoin slides below $74,000 amid hotter CPI and rate‑hike expectations
On Wednesday, Bitcoin slipped 1.1% to $73,698.0 as of 04:52 ET (09:52 GMT), marking a three‑month low and moving the world’s largest cryptocurrency below the $74 k threshold. The price pressure stemmed primarily from a hotter‑than‑expected consumer‑price‑index (CPI) reading for October, which prompted market participants to increase bets that the U.S. Federal Reserve will raise its policy rate in December.
The CPI data, described as “hot,” was accompanied by hawkish commentary from two Federal Reserve officials who called for higher rates to curb persistent inflation. Consequently, the CME FedWatch tool showed an 89% probability that the Fed will lift rates by 25 basis points in December, while the likelihood of a larger 50‑basis‑point hike remained small. This represented a sharp reversal from earlier market expectations that the Fed would hold rates steady at the year‑end meeting.
Higher rates are generally unfavorable for speculative assets such as cryptocurrencies because they raise the opportunity cost of holding risk‑on positions relative to debt instruments. Bitcoin’s recent weakness mirrors its historical underperformance during the Fed’s 2022‑2023 tightening cycle.
The cryptocurrency market also faced additional headwinds from a stronger U.S. dollar, rising yields, and continued capital outflows from spot exchange‑traded funds, all of which compounded the downward pressure on prices.
Political developments added to the bearish sentiment. Following the mid‑term elections, Democrats secured majorities in both chambers of Congress, prompting market concerns that the new legislative environment could usher in stricter regulatory scrutiny of the crypto sector, particularly around anti‑money‑laundering and risk‑management standards.
Altcoin prices tracked Bitcoin’s decline. Ether fell 2.4% to $2,054.29, XRP dropped 2.8%, Solana slipped 2.4%, Cardano declined 1.5%, Binance Coin (BNB) fell 1.7%, and Dogecoin decreased 2.6%. Among meme tokens, $TRUMP edged up 0.2%.
The article was authored by Ambar Warrick and contributed to by Vahid Karaahmetovic, with data sourced from Reuters and Investing.com.