Bitcoin Falls Sharply as September CPI Fuels Inflation Concerns

U.S. inflation accelerated more than analysts anticipated in September, raising the prospect of further Federal Reserve rate increases and potentially bringing an October hike back into consideration.

The Bureau of Labor Statistics reported Wednesday that the Consumer Price Index (CPI) climbed 0.6% during September, compared with a 0.4% increase in August. The monthly reading matched economists’ expectations.

Annual headline inflation rose to 3.7%, up from 3.4% the previous month and above the 3.6% estimate.

Excluding food and energy, core CPI increased 0.3% month over month, matching August’s pace but exceeding forecasts for a 0.2% rise. Annual core inflation also picked up, reaching 2.6% versus 2.4% in August and surpassing the expected 2.5%.

Bitcoin (BTC) declined following the announcement, shedding around $1,000 to trade near $82,800 after previously standing at $83,212.45.

Financial markets broadly reacted to the hotter inflation reading. The 10-year U.S. Treasury yield gained 9.3 basis points to 5.308%, while the two-year yield rose 13.1 basis points to 4.924%, reflecting a sharp sell-off in government bonds.

U.S. equity futures also moved lower. Nasdaq 100 futures dropped 0.65%, while S&P 500 futures slipped 0.3%. Gold lost 1.5%, falling to $4,116 per ounce.

Before the report, several Federal Reserve policymakers had suggested that another 25-basis-point rate increase could occur before year-end. Traders had generally expected the Fed to hold rates steady at its October meeting and potentially raise them at its final meeting in early December.

The latest figures could force investors to reconsider that timeline. With inflation running hotter than forecast, the possibility of an October rate increase has returned to the discussion, while expectations for further tightening may also strengthen.