Bitcoin Drops as U.S. September Inflation Exceeds Expectations

Stronger-than-expected U.S. inflation in September could revive expectations of multiple Federal Reserve interest-rate hikes.

The Consumer Price Index (CPI) increased 0.6% in September, according to a Wednesday morning report from the Bureau of Labor Statistics. The monthly increase accelerated from 0.4% in August, matching economists’ forecasts.

On an annual basis, headline inflation climbed to 3.7%, up from 3.4% in August and exceeding expectations of 3.6%.

Core CPI, which excludes volatile food and energy prices, also came in above forecasts. It rose 0.3% in September, matching August’s monthly increase but surpassing economists’ consensus estimate of 0.2%.

Annual core inflation reached 2.6%, compared with 2.4% the previous month and above the 2.5% forecast.

Bitcoin (BTC), trading at $83,212.45 before the report, fell by $1,000 following the release and was trading around $82,800.

U.S. Treasury markets also came under heavy pressure. The 10-year Treasury yield jumped 9.3 basis points to 5.308%, while the two-year yield surged 13.1 basis points to 4.924%.

Stock futures moved lower as well, with Nasdaq 100 futures falling 0.65% and S&P 500 futures declining 0.3%. Gold prices dropped 1.5% to $4,116 an ounce.

Before the inflation report, several Federal Reserve officials had indicated that another 25-basis-point rate increase could be necessary before the end of the year. Market expectations had largely reflected the possibility of the Fed holding rates steady at its meeting later this month before raising them at its final policy meeting in early December.

However, September’s hotter-than-expected inflation figures could put an October rate hike back into consideration.