In December? 🇺🇸🔥
The U.S. October Consumer Price Index (CPI) report came in hotter than expected, immediately sending ripples through high-risk asset markets and cryptocurrencies around the world.
Headline CPI rose 0.4% month over month (versus consensus expectations of 0.3%), while core CPI came in at 0.3% month over month (above the 0.2% estimate). Note that due to the data gap caused by the 2025 government shutdown, no official year-over-year comparison figure was published.
📊 Repricing interest rate expectations and probabilities according to the CME FedWatch tool
🏦 A 25-basis-point hike is fully priced in: Markets entered the data release with an 85%–98.9% probability of a 25-basis-point rate hike at the December meeting. After the upside surprise, a 25-basis-point hike remains firmly the base-case scenario
📈 A 50-basis-point hike becomes more likely: With core CPI reaching the 0.3% threshold set by Federal Reserve Governor Waller, the probability of a larger, 50-basis-point hike jumped to around 15.3% (up from 1.1% before the data release).
🚫 Rate cuts ruled out: Any immediate expectations of Fed easing or a rate hold have been pushed back to 2027.
📉 Impact on crypto and markets: $BTC falls below $74,000
🪙 Pressure on Bitcoin: Bitcoin fell to $73,762 after the data release, directly testing the key support level at its 200-day moving average ($73,100), amid liquidations of leveraged market positions worth between $179 million and more than $200 million.
💵 Dollar and yields strengthen: Elevated inflation, along with strong GDP and a resilient labor market, boosts the U.S. Dollar Index (DXY) and Treasury yields, keeping financial conditions tighter.
🎯 Traders’ takeaway: Does this seal a rate hike? Yes, with a probability close to 100%. The higher-than-expected CPI reading removes any remaining doubt that the Fed will act in December. For crypto traders, the focus now is on whether $BTC can hold support at its 200-day moving average of $73,100, or whether higher interest rates will continue to weigh on market liquidity.
Share your thoughts in the comments 🤍
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