Bitcoin and Ethereum posted double-digit losses on Thursday after U.S. inflation data nudged market participants back toward the prospect of a Federal Reserve rate hike. The broader sell-off extended to equities and Asian benchmarks, highlighting the sensitivity of risk-heavy assets to funding-cost concerns.

Inflation data and rate expectations

The U.S. Consumer Price Index for September increased by 0.6% from August and 3.7% year-over-year. Core CPI, which strips out food and energy, rose 0.3% month-over-month and 2.6% annually, while gasoline prices surged 9.1%, driving more than half of the headline gain.

CME FedWatch’s probability curve briefly lifted the implied chance of an October 28 rate hike to 31.6% from 22.1% the day before, before later settling on a 75% likelihood that the Fed would hold rates steady at its upcoming meeting.

Impact on crypto prices

The heightened rate-hike chatter pressured assets whose valuations depend heavily on cheap capital. Bitcoin slipped around 4% in the 24-hour period, testing support near $80,764, while Ethereum dropped roughly 6.5%, reflecting its higher beta to market sentiment. Analysts note that the move underscores the ongoing debate over whether Bitcoin functions more as a high-beta speculative instrument than a hedge against inflation.

Broader market reaction

U.S. equities mirrored the crypto decline, with the S&P 500 down 1.1% and the Nasdaq Composite losing 1.9%. Technology-focused AI stocks such as Oracle and CoreWeave also faced pressure as borrowing costs rose. In Asia, the South Korean KOSPI tumbled 8% and Japan’s Nikkei 225 fell 4.8%, with major chipmakers and conglomerates posting double-digit losses.

The bond market showed a nuanced response: the 10-year Treasury yield slipped 7.8 basis points to 5.110%, indicating a modest flight to safety even as equity markets sold off.

Outlook and key data points

Upcoming releases—including Fed officials’ speeches, producer-price figures, and retail-sales data—will shape expectations ahead of the October 27-28 policy meeting. If the probability of a hike rises again, further pressure on AI-linked equities and higher-beta cryptocurrencies could persist. Conversely, a stable probability near 75% may shift attention to whether the technology sell-off stabilises and whether Bitcoin can reclaim lost ground.

Why it matters

The episode illustrates how macroeconomic indicators, especially inflation and rate expectations, can quickly cascade through risk-on assets, affecting both traditional equities and digital currencies. For investors, the episode reinforces the importance of monitoring central-bank signals and broader market sentiment when assessing exposure to high-beta crypto assets such as Bitcoin and Ethereum.