Bitcoin fell to an intraday low of $80,444 on Thursday, trading near $81,002 as hotter-than-expected U.S. inflation data revived market bets on a Federal Reserve rate hike. Consumer prices rose 3.7% in the year to September and 0.6% over the month, marking the largest monthly increase in five months driven largely by energy costs linked to the war with Iran. Following this report, traders' odds of a Fed rate hike this month jumped to 43% from 24%, though federal funds futures still point to December for the next increase. The Fed previously raised rates to a range of 3.75% to 4% in September.
Market analysts attribute the price decline to both macroeconomic pressures and structural shifts in demand. Tim Sun of HashKey Group noted that slowing demand from spot ETFs and corporate Bitcoin treasuries explains the stalled rally more than macro factors alone. As borrowing costs rise, narrowing valuation premiums at some corporate treasuries have made it less attractive to raise capital for Bitcoin purchases. However, Sun pointed out that major traditional banks have added long-term capital, preventing a sustained deep sell-off.
Stephen Wundke, strategy director at Algoz, expects Bitcoin to trade between $76,000 and $83,000 for the rest of October unless a clear catalyst emerges. He emphasized that staying above $79,500 is crucial for bullish momentum. Meanwhile, Abdul Rafay Gadit of ZIG Finance described Bitcoin as trading like a liquidity asset, where higher-for-longer interest rates tighten liquidity. The next Fed rate decision is scheduled for October 28.
The recent dip in Bitcoin's price underscores its continued sensitivity to U.S. monetary policy expectations, particularly when inflation data diverges from forecasts. While traditional narratives often frame crypto as a hedge against fiat debasement, current market behavior suggests it remains tightly correlated with risk assets during periods of tightening liquidity. The resurgence of rate hike bets following hot inflation data has directly pressured valuations, indicating that institutional investors are prioritizing yield certainty over speculative growth in the short term.
Beyond macro factors, the structural change in marginal buyers presents a significant shift in market dynamics. The reduced appetite from corporate treasuries due to higher borrowing costs highlights a vulnerability in the previous bull run's primary driver. However, the entry of traditional banks provides a stabilizing counterweight, suggesting a maturation of the asset class. Investors should monitor whether ETF flows return to net inflows, as this will be the key indicator determining if Bitcoin can break out of its projected $76,000-$83,000 range before the October 28 Fed decision.
