Bitcoin Drops Below $81K as Fed Rate Hike Fears Spike

Higher U.S. Inflation Triggers Market Sell-Off

The crypto market experienced a sharp pullback as fresh economic headlines rattled investor confidence. Overall market capitalization fell 3.2%, erasing about $89.36 billion and taking total valuation down to $2.71 trillion.

Bitcoin felt the impact directly. After reaching a high of $83,700 over the past day, the asset slid 3.5% to a low of $80,226.

The main catalyst behind the move was the Consumer Price Index report released on October 14. U.S. inflation reached 3.7% year-over-year in September, rising above August's 3.4% level.

This higher inflation reading cooled expectations for near-term interest rate cuts. Data from the CME FedWatch Tool showed that the odds of a Fed rate hike jumped to 44%, up from a low of 18%.

This sudden shift follows the central bank's 0.25 percentage point rate increase on September 16, which was its first hike since 2023. Markets are now turning attention to the U.S. Producer Price Index report on October 15 for further economic clues ahead of the Fed's October 27–28 meeting.

Derivatives Liquidations Near $1 Billion

As prices dropped, traders holding leveraged positions faced heavy forced closures. According to data from CoinGlass, 182,574 traders were liquidated in a single 24-hour window.

Total market liquidations reached $972.46 million over this period.

• Long Positions Hit Hardest: Traders betting on rising prices accounted for $891.2 million, or 91.7% of all liquidations.
• EthereumETH-0.90% Sees Heavy Selling: Ethereum traders were also impacted, recording over $293 million in liquidations as its price moved toward $2,390.

Institutional Inflows Cool as ETF Outflows Continue

Institutional interest through spot Bitcoin exchange-traded funds (ETFs) has also shown signs of slowing down.

On October 14, spot Bitcoin ETFs recorded $261.4 million in net outflows, breaking a three-week streak of positive inflows.

Since October 7, these funds have logged approximately $1.02 billion in total net redemptions.

Blockchain analytics platform Glassnode noted that organic buying demand remains light. A combination of ETF outflows and investors selling near break-even prices has limited immediate buy-side support.

Can Bitcoin Hold Key Technical Support Levels?

Traders are currently watching whether Bitcoin can hold its primary support zone between $80,000 and $80,500.

Glassnode data shows that the largest concentration of buy orders on Binance's spot market has shifted down from $81,000 to $80,000.

The $80,000 mark is critical because it sits below the average cost basis for U.S. spot Bitcoin ETF holders, which is roughly $81,500. A daily price close below $80,000 could leave the average ETF investor in a temporary net loss.

Looking at potential market paths, if ETF outflows persist and broader macroeconomic pressures keep building, analysts at Glassnode indicate Bitcoin could test lower liquidation areas near its True Market Mean around $78,000. On the other hand, if institutional demand recovers and macroeconomic sentiment stabilizes, the $80,000 level could serve as a firm base. Digital asset markets remain highly volatile, so short-term price movements can shift rapidly.

Past performance of digital assets is not a guarantee of future results. Track real-time prices and market data on Bitkub BTCBTC+0.03% Market.