Hotter-than-expected October inflation data and Fed rhetoric have shifted market expectations toward a potential 50-basis-point rate hike, triggering a sell-off in Bitcoin, Ether, and Solana.
October CPI came in hot at 0.4% month over month versus 0.3% expected, and Fed Governor Waller said a further 0.3% core reading would justify a 50-basis-point December hike. Higher rates raise borrowing costs and squeeze leveraged crypto carry strategies, and Bitcoin already fell 2% to about $73,274 as the broader crypto market cap dropped 1.6% to $2.57 trillion.
The hotter-than-expected October CPI and Waller's openness to a 50-basis-point December hike increase the chance of tighter monetary policy, weighing on crypto broadly. Ether was among the hardest hit, falling nearly 5% to around $2,028, showing direct price reaction to the report.
Above-forecast inflation and rising odds of an aggressive December Fed hike pressure the whole crypto market, and high-beta coins like Solana tend to fall hardest. Solana dropped 5.6% to $82 over the past 24 hours, confirming the immediate negative reaction.
October CPI rose 0.4% MoM versus 0.3% expected and core rose 0.3% versus 0.2% expected, with Waller saying a 50-basis-point December hike should be considered. Markets moved from pricing a quarter point to roughly 27 basis points of December tightening, supporting the dollar through higher expected policy rates.
US inflation rose 0.4% in October, exceeding the 0.3% forecast and fueling expectations for a more aggressive Federal Reserve interest rate hike in December. Following comments from Governor Christopher Waller, markets are now pricing in 27 basis points of tightening, putting pressure on crypto assets as borrowing costs rise.
Hotter-than-expected US inflation raised the odds of a larger Fed rate hike in December, which makes borrowing more expensive and can pull money out of risky assets like crypto; Bitcoin was already down 2% in the past 24 hours.
Ether fell nearly 5% over the past 24 hours to around $2,028 after the inflation report.
The report made a bigger December Fed rate hike more likely, squeezing leveraged crypto investors, and Solana fell 5.6% to $82 versus Bitcoin's 2% decline as riskier assets sold off more.
It raises expectations that the Fed will hike rates in December, possibly by a larger half point, which supports the dollar through higher expected borrowing costs; markets now price about 27 basis points of December tightening.