Bitcoin fell 1.5% to $82,142 on Wednesday after U.S. inflation came in hotter than expected, dragging most of the crypto market lower with it. Ethereum dropped 2.8% to $2,440, Solana lost 1.9%, and XRP slid 1.3%, while the total crypto market capitalization shed 0.7% to $2.8 trillion.

The selloff followed a Consumer Price Index report showing consumer prices rose 0.6% in September and 3.7% over the past year, up from 3.4% in August, according to the Bureau of Labor Statistics. Economists had expected a 3.6% annual reading. Gasoline prices jumped 9.1% in a single month and accounted for more than half of the overall increase.

Core CPI, which strips out volatile food and energy prices, rose 2.6% annually against a 2.5% forecast. That is the figure the Federal Reserve watches most closely, because it shows whether price pressures are spreading into rent, airfares, and services.

Expensive gasoline starts with expensive oil, which has traded above $90 a barrel for most of the past two months amid the war between the U.S. and Iran. Pricier fuel raises the cost of shipping and producing almost everything.

When inflation runs hot, the Fed raises interest rates to cool spending. It already hiked in September, lifting its benchmark rate — the baseline for borrowing costs across the economy — to a 3.75%-4.00% range, and traders now assign roughly 44% to 49% odds of another hike at the Fed's October 27-28 meeting, up from 22% before the report, according to CME FedWatch.

The 2-year Treasury yield, which closely tracks Fed rate expectations, jumped about 10 basis points to roughly 4.9%, while the 10-year yield climbed to about 5.3%, near 24-year highs.

Higher yields hit crypto directly. A government bond paying 5.3% with almost no risk competes with Bitcoin, which pays nothing. Rising rates also make borrowing more expensive and tend to strengthen the dollar, draining the cheap money that speculative assets feed on. That dynamic weighed on equities as well, with the S&P 500 falling 0.6% and the Nasdaq .8% on the same news.

Crypto also swings harder than stocks because many traders borrow to bet on rising prices. When the price drops past a set level, exchanges automatically close those positions — a process called liquidation — and that forced selling can push prices lower and trigger further liquidations in a chain.

More than $281 million in crypto derivatives positions have been liquidated in the past 24 hours, with most of it coming in just the last four hours — and the majority of that from Bitcoin long positions: traders betting the price would rise, and now paying the price for the drop.

Bitcoin Price: The Macro Picture Is Punching Hard

On the daily chart, Bitcoin opened at $83,066 and now trades near $82,211, sitting inside the Fibonacci "golden zone" between $81,847 and $82,305 that it reclaimed on Tuesday. That zone marks an area where pullbacks within uptrends often attract buyers.

The average price of the last 50 days remains above the 200-day average, a setup traders read as an intact long-term uptrend. The Average Directional Index, which gauges trend strength on a 0-to-100 scale where readings above 25 confirm a trend, sits at 27.7 with buyers still ahead, down from 29.9 on Tuesday — meaning traders are bullish, just not as much as they used to be.

The Relative Strength Index, a momentum gauge from 0 to 100, slipped to 48.7, just under the 50 line that separates bullish from bearish momentum. The Squeeze Momentum Indicator has been for eight sessions, meaning volatility is compressed and a large move is building; its -0.76 reading leans bearish by a small margin.

A daily close below $81,603 would break the golden zone and bring the $80,365 swing low into play, with the trend band near $80,284 right beneath it; losing that level would expose $78,003. On the upside, bulls need to reclaim $84,245 before targeting $85,301, $86,644, and the October high of $87,422.

The next test arrives Thursday with the Producer Price Index, which tracks what businesses pay for goods and services and is often read as an early gauge of cost pressures before they reach consumers. Both inflation readings will be in hand by the time the Fed announces its next rate decision on October 28, the closing day of its two-day meeting.

Disclaimer: The views and opinions expressed in this article are for informational purposes only and do not constitute financial, investment, or other advice.