Bitcoin Plunges Amid Fed Hike Odds Rise to 55% as Crypto Wipeout Hits $100M

Market Reaction

Bitcoin fell below $83,000 on Wednesday as hotter-than-expected US core inflation data revived expectations of further Federal Reserve interest rate hikes, triggering a fresh wave of liquidations across the cryptocurrency market.

Liquidations and Market Impact

Over $100 million in leveraged positions were liquidated in the hour after the inflation report was released, pushing total liquidations above $220 million over 24 hours.

Macro-Economic Pressures

The sharp increase in forced selling highlighted how quickly traders reacted to renewed inflation pressures and the prospect of tighter US monetary policy.

Core Inflation Data

According to the Bureau of Labor Statistics, consumer prices increased 3.7% annually in September, above the 3.6% forecast and August's 3.4% reading.

Fed Policy Hike

Kalshi's prediction market showed the probability of a 25-basis-point Fed hike in October rising to 55% from 21%, while traders increased bets on further tightening through 2027.

Bitcoin Demand

Despite the renewed macroeconomic pressure, Bitcoin's underlying demand indicators were showing signs of improvement following two months of weakness.

CryptoQuant Data

CryptoQuant data estimated that total demand increased by about 69,000 BTC after two largely negative months, suggesting buying activity was strengthening beyond leveraged derivatives positions.