Bitcoin, crypto market fall as hot US inflation triggers $700 million in liquidations

Bitcoin (BTC) declines toward $73,000 on Tuesday following October's hotter-than-expected US Consumer Price Index (CPI) report, which triggered renewed concerns about the Federal Reserve's (Fed) interest rate outlook.

US inflation exceeds expectations in October

US consumer prices increased 0.4% month over month in October, exceeding economists' expectations of a 0.3% increase, according to data released by the Bureau of Labor Statistics (BLS). However, the reading represents a slowdown from September's 0.6% increase.

Core CPI, which excludes volatile food and energy prices, increased 0.3%, above forecasts of 0.2%. The reading was unchanged from September, suggesting that underlying inflationary pressures have yet to ease.

The BLS did not publish the usual annual inflation figures because the previous year's government shutdown prevented data collection for October 2025.

Higher inflation pressures the Fed to maintain a restrictive policy environment, which has historically been less favorable for risk assets.

The inflation data sparked renewed selling pressure across the crypto market, with Bitcoin falling below $73,000, Ethereum (ETH) dropping 5% to $2,029, while BNB, XRP and Solana (SOL) declined by 2%, 4.3% and 5.3%, respectively.

The decline triggered $716 million in futures liquidations, dominated by $589 million in liquidated long positions in the past 24 hours, according to Coinglass data.

The reaction extended beyond crypto, with US equities also declining. The S&P 500 fell 0.94%, while the Nasdaq Composite dropped 1.51%. The Dow Jones Industrial Average also declined 0.61% as the 10-Year Treasury Note Yield rose above 5% at the time of writing.

Bitcoin risks drop to $68K if $73K support fails

Wintermute earlier highlighted Bitcoin's improving correlation with traditional financial markets in a Tuesday market update. The firm observed that Bitcoin climbed to $81,000 last Wednesday as Oil dropped and equities rallied, but surrendered those gains by Friday as both markets reversed.

The trading firm also highlighted $73,000 as an important support level, corresponding to Bitcoin's 200-day moving average.

“A daily close below it and the 200-day opens $68K, and we would expect the altcoins that rallied hardest after mid-September to take the brunt of that move, as they had the least basis to be up,” Wintermute wrote.

Meanwhile, Bitcoin's weekly close below its 50-week moving average at approximately $75,500 ended a seven-week run above the level.

Wintermute noted that it maintains a cautious outlook while Bitcoin trades below its 50-week average. The firm added that a sustained daily close above $80,000 alongside renewed inflows into spot Bitcoin exchange-traded funds (ETFs) would be needed to turn its outlook constructive. The products recorded $1.28 billion in net outflows last week, their largest weekly outflow since June.