The cryptocurrency market remains under intense selling pressure as stronger-than-expected US inflation data fuels concerns over additional Federal Reserve interest rate hikes. Bitcoin and major altcoins have suffered significant losses, with investors increasingly cautious about the outlook for risk assets.
Bitcoin briefly dropped below the $82,000 support level before recovering, while broader crypto market liquidations exceeded $930 million over the past 24 hours. The downturn follows fresh inflation reports suggesting that the Federal Reserve could maintain restrictive monetary policies longer than previously anticipated.
Adding to market uncertainty, UBS has revised its US interest rate forecast, now predicting two additional Fed rate hikes through 2027. The investment bank expects potential increases in December 2026 and March 2027, compared with its earlier projection of only one hike in December.
Market commentator Walter Bloomberg highlighted the updated UBS forecast on X, emphasizing growing concerns about persistent inflation across the US economy.
According to the revised outlook, inflationary pressures are spreading beyond energy costs into consumer goods and services, complicating the Federal Reserve's efforts to bring inflation toward its 2% target.
Meanwhile, financial markets reportedly anticipate nearly five additional rate hikes, reflecting a more aggressive outlook than UBS's projections.
The latest US Producer Price Index (PPI) data has further intensified concerns. September headline PPI increased 1.3% month over month, significantly exceeding the expected 0.6% rise. Annual producer inflation reached 6.3%, surpassing forecasts of 5.4%.
Core PPI also exceeded expectations, climbing 0.7% monthly against estimates of 0.3%. On an annual basis, core producer inflation reached 5.0%, above the projected 4.4%.
These figures followed another inflation surprise, with September's US Consumer Price Index (CPI) rising to 3.7% annually.
According to the CME FedWatch Tool, the probability of a December Fed rate hike has climbed above 66%, reinforcing expectations of tighter monetary conditions.
Higher interest rates typically reduce market liquidity and discourage investment in volatile assets, potentially creating additional downward pressure on Bitcoin, Ethereum, XRP, and other cryptocurrencies.
Investors are now closely monitoring the Federal Reserve's October 27–28 policy meeting for signals about future interest rate decisions. Any hawkish comments could trigger renewed crypto market volatility as traders reassess inflation risks and the outlook for monetary policy.
