Bitcoin fell below $74,000 after US inflation exceeded economists’ expectations. Comments from Federal Reserve Governor Christopher Waller added further pressure to the cryptocurrency market.
Waller supported raising interest rates in December and did not rule out a more aggressive move. Investors are now reassessing the outlook for cryptocurrencies and stock markets.
Fed Considers Raising Interest Rates by Up to 50 Basis Points
Bitcoin traded around $74,000 during Tuesday’s session. Following the release of US inflation data, its price dropped to approximately $73,200. By Wednesday morning, the cryptocurrency was still trading below $74,000.
The sell-off also affected US stocks. The technology-heavy Nasdaq index lost approximately 0.7% on Tuesday. Investors primarily reacted to the growing likelihood of further monetary policy tightening.
Federal Reserve Governor Christopher Waller supported a 25-basis-point increase in the benchmark interest rate at the December meeting during a speech in London.
According to Waller, the US economy remains relatively strong, while the labor market continues to show stability. The main concern is inflation, which remains significantly above the Fed’s 2% target.
If inflation fails to ease, Waller suggested that the Fed should even consider raising interest rates by 50 basis points. Such a move would represent a more aggressive intervention than markets had initially anticipated.
Waller also highlighted rising energy and technology equipment prices. In particular, investments in artificial intelligence infrastructure could contribute to longer-lasting inflationary pressures.
Higher Inflation Puts Additional Pressure on Bitcoin
The US Bureau of Labor Statistics (BLS) subsequently released its October inflation report.
Consumer prices increased by 0.4% month over month, compared with economists’ expectations of just 0.3%.
Core inflation, which excludes food and energy prices, reached 0.3%. This exceeded expectations of 0.2% and remained at the same level for the third consecutive month.
The figures strengthened expectations of a December rate hike. Markets currently assign approximately a 15% probability to a more aggressive 50-basis-point increase.
Higher interest rates are particularly problematic for risk assets. They make bonds more attractive, increase borrowing costs, and can restrict capital flows into equity and cryptocurrency markets.
The reaction was also visible in US government bonds. The yield on the 10-year US Treasury approached 5% during Tuesday’s trading session.
Investors are now primarily focused on the Federal Reserve’s December 8–9 meeting. Its outcome could determine whether Bitcoin manages to stabilize above its recent lows.
From a technical perspective, the $73,000–$73,500 area remains an important support zone. A breakdown below this range could open the door to further losses. Conversely, a recovery above $75,000 would represent the first positive signal for buyers.
