Bitcoin came under renewed selling pressure over the last 24 hours after hotter-than-expected US inflation data unsettled financial markets and increased expectations of further Federal Reserve tightening.
The cryptocurrency dropped more than 1% shortly after the Consumer Price Index release, as traders reassessed the outlook for interest rates.
The headline inflation surged to 3.7% year-over-year from 3.4%, while consumer prices increased 0.6% on a monthly basis. A 9.1% jump in gasoline prices accounted for much of the monthly increase.
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Core inflation, which strips out volatile food and energy costs, stood at 2.6% annually. The figures intensified concerns that inflation could remain elevated, limiting the Federal Reserve’s flexibility to ease monetary policy.
For Bitcoin, the immediate market reaction added macroeconomic pressure to an already fragile technical outlook.
Fed expectations shift as Treasury yields and dollar strengthen
The inflation release prompted a sharp adjustment in interest rate expectations.
CME FedWatch data shows the probability of a 25-basis-point increase at the October 28 Federal Open Market Committee meeting rose above 50%, up from about 20% earlier in the week.
Those probabilities reflect market pricing at the time of the report and can change as new economic information emerges.
Expectations for interest rate cuts before year-end also weakened. The next policy decision consequently became more closely balanced between leaving rates unchanged and delivering another increase.
Meanwhile, US 10-year Treasury yields firmed and the US Dollar Index strengthened. Higher yields can make interest-bearing assets more attractive, while a stronger dollar can weigh on demand for risk assets, including cryptocurrencies.
Together, these developments created a more difficult backdrop for Bitcoin buyers attempting to establish a recovery.
Bitcoin’s bear flag pattern signals further downside risk
Beyond the macroeconomic pressure, Bitcoin’s four-hour $BTC/USDT perpetual chart showed a potential bearish continuation pattern.
The setup followed a decline from approximately $86,000 to $81,000. Bitcoin subsequently consolidated inside a narrow, upward-sloping channel, forming what is known as a bear flag.
$BTC has broken below the channel’s lower boundary near $82,371. Bitcoin is also trading below its 20-period exponential moving average at $83,196 and its 50-period EMA at $83,384.
These moving averages formed an overhead resistance zone that buyers needed to overcome to improve short-term momentum.
Repeated rejection around that area would leave the bearish structure intact and increase attention on lower support levels.
The bears pushed below the support formed at the four-hour 200-period EMA near $82,046. A daily candle close below this support has exposed the psychologically important $80,000 threshold to a potential test.
Momentum indicators offered limited reassurance for buyers. The 14-period Relative Strength Index stood at 43 and is pointing lower, indicating weak momentum without an oversold reading.
Using the bear flag’s measured-move method, Bitcoin could continue its decline, with a downside target near $78,218.
Buyers would first need to recover the resistance area around $83,196–$83,384 to challenge the immediate bearish momentum.
A move above approximately $83,400, followed by a push through $84,000, would weaken the bear flag setup.
A daily close above $84,000 would provide stronger evidence of a recovery and shift attention toward the earlier local peak near $86,000.
Until those levels are reclaimed, Bitcoin remains exposed to further downside if inflation concerns continue to weigh on broader markets.
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