Bitcoin Slips as Fed Rate Uncertainty Mounts and South Korea’s Kospi Crashes 8%

Bitcoin and global equities declined after stronger-than-expected U.S. inflation data revived concerns that the Federal Reserve could increase interest rates in October. Market-implied odds of a rate hike briefly surged to nearly 50% after Wednesday’s report, although expectations subsequently cooled.

Bitcoin, the world’s largest cryptocurrency by market capitalization, dropped 1% from midnight UTC. During early Asian trading, BTC slipped toward $80,000 before recovering briefly to approximately $81,500. The rebound failed to hold, with prices settling near $81,000, according to CoinDesk data. Bitcoin also recorded losses exceeding 2% over the previous 24 hours.

Other major cryptocurrencies experienced sharper declines. Ethereum, XRP and Solana each fell between 3.5% and 4%. PYTH was the only cryptocurrency among the top 100 by market capitalization to maintain gains of more than 7%.

Traditional markets also weakened as investors reduced exposure to riskier assets. Nasdaq futures declined 1% at the time of writing, extending Wednesday’s 2% drop. South Korea’s KOSPI index plunged 8%, triggering circuit breakers as selling intensified.

U.S. inflation accelerated in September, with consumer prices rising 3.7% over the year, compared with 3.4% in August. The increase also exceeded economists’ expectations. Core CPI, which excludes food and energy, advanced 2.6%, up from 2.4% the previous month.

The hotter inflation figures triggered a rapid reassessment of the Federal Reserve’s next policy move. On prediction platform Polymarket, the probability of an October rate hike briefly climbed to almost 50% before easing to approximately 30%. CME’s FedWatch tool showed a similar pattern: the implied probability rose from around 22% to nearly 47%, then declined to 26% at the time of writing.

Vikram Subburaj, chief executive of India-based cryptocurrency exchange Giottus, said the latest figures had renewed fears that interest rates could remain elevated for an extended period. September’s 3.7% annual inflation reading has increased uncertainty about the Federal Reserve’s next decision, he added.

Subburaj also pointed to weak institutional investment flows. U.S. spot Bitcoin exchange-traded funds recorded $150.5 million in net outflows on October 14, reversing the $175.7 million in inflows reported in the previous session.

Market-making firm STS Digital warned that uncertainty surrounding the Federal Reserve’s upcoming meeting could further weaken liquidity and reduce appetite for risk across financial markets.

“With the next FOMC a coin flip, this uncertainty is damaging liquidity and dampening risk appetite across all asset classes,” STS Digital’s Anderson told CoinDesk in an email.

Nevertheless, Anderson expects the Federal Reserve to maintain interest rates at their current level this month. CME Fed funds futures supported that outlook, showing a probability above 70% that policymakers would leave rates unchanged at the time of writing.

Anderson added that cryptocurrencies are becoming increasingly responsive to wider economic conditions despite recent optimism in digital asset markets. Rising energy costs, volatility in fixed-income markets and concerns over artificial intelligence valuations are contributing to weaker investor sentiment.

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