Bitcoin fell below $81,000 after hotter-than-expected US inflation data revived concerns that the Federal Reserve could raise interest rates in October, while South Korea’s Kospi plunged 8%.
Investors initially increased bets on an October rate rise to almost 50% after Wednesday’s inflation report. However, those expectations have since eased, with markets now pricing in a probability of about 26% to 30%.
The shift in rate expectations has added to pressure on bitcoin, as uncertainty over the Federal Reserve’s next move weighs on demand for riskier assets. A higher interest-rate environment can reduce the appeal of speculative investments, including cryptocurrencies.
Bitcoin was listed at $81,211.60, down 2.97%, while Ethereum stood at $2,349.24, a fall of 6.12%.
Institutional demand has also remained fragile. US spot bitcoin exchange-traded funds recorded outflows of $150.5 million on 14 October, adding to concerns about liquidity and investor appetite across the wider market.
The combination of unsettled economic conditions and reduced institutional flows has made it harder for the cryptocurrency market to absorb selling pressure.
Nearly $1bn in crypto positions were liquidated as bitcoin, ether and XRP fell. A mining pool that had previously handled 2.3% of the Bitcoin network also shut down after its hashrate dropped by 65%.
The market moves came as investors assessed the latest inflation figures and reconsidered the path for US interest rates. Bets on a rate increase had briefly approached one in two immediately after the data was released, before falling back to their current range.
The recent decline has also affected other major developments in the digital-asset sector. BlackRock’s crypto exchange-traded fund assets have risen 63%, although they remain well below their 2025 peak.
Separately, the former FTX Europe chief is targeting US tokenised stock trading through a new Securities and Exchange Commission exemption. Kraken parent Payward is also seeking to become the first crypto firm to buy a European Union bank as it expands into deposits and lending.
The broader digital economy is facing questions over the need for power-grid upgrades and who will pay for them, while Kalshi’s chief executive said state-led oversight of US prediction markets would force the company to move those operations out of the country.
