Bitcoin fell to just above $81,000 on Thursday after a hotter-than-expected U.S. inflation print drove up market expectations for a Federal Reserve rate hike later this month.
The flagship cryptocurrency was 0.7% lower at $81,181, having tumbled to as low as $80,580 earlier in the session. Bitcoin started its decline on Wednesday, after the latest CPI release showed prices for consumer goods were 3.7% higher in September than the same time last year, above economists' expectations.
The CME Group's FedWatch assesses a 73% chance that interest rates stay unchanged after the Federal Reserve's Oct. 28 meeting, with a 27% chance of a quarter-point boost. Immediately after the CPI report, odds put out by some analysts were seen swinging to around 50/50 for a potential increase.
"For cryptocurrencies, higher rates can reduce investors' willingness to take risks and increase the relative appeal of yield-bearing instruments," said Simon-Peter Massabni, head of retail sales at multi-asset broker XS.com.
Investor sentiment in equity markets also took a hit. The Nasdaq and S&P 500 logged their biggest one-day declines since July on Wednesday as inflation worries and AI sector jitters sent markets lower.
South Korea's Kospi--which is heavily skewed toward chip stocks--tumbled 7.5% on Thursday as Samsung Electronics and SK Hynix plunged 9.5% and 11%, respectively.
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