October CPI Surprise Triggers $200M Crypto Liquidation

Roughly $200 million in leveraged cryptocurrency positions were liquidated within five minutes on Tuesday after US inflation data came in hotter than forecast. The Bureau of Labor Statistics reported a 0.4% increase in consumer prices for October, exceeding the 0.23% forecast by analysts. Both bitcoin (BTC) and gold declined in response.

Prior to the release, betting markets had assigned an 84% probability to a December rate hike by the Federal Reserve, according to a BeInCrypto report. Core inflation—excluding food and energy—remained at 0.3% for a third consecutive month, raising the prospect of higher borrowing costs for bond, equity, gold and bitcoin holders.

How did bitcoin and gold react to the CPI numbers?

In the five minutes following the 8:30 a.m. ET data release, bitcoin traded between $74,770 and $73,525 on Binance. By the end of that period, it had settled near $73,709, a decline of 0.9%, and was at $73,918 at 8:36 a.m. ET.

The liquidation wave primarily affected long positions—bets on rising prices funded with borrowed capital. Approximately $200 million worth of such positions were forcibly closed by exchanges as losses accumulated in the minutes after the report.

Over the same interval, spot gold fell 0.6% to roughly $4,048 per ounce, having briefly touched $4,040, according to OANDA. It remained close to that level at 8:36 a.m. ET.

The connection to the Federal Reserve is straightforward. When the Fed increases rates to curb inflation, the returns on cash and Treasury bonds rise, making non-yielding assets like gold and bitcoin less attractive.

On Monday, BeInCrypto highlighted that risk, noting that stronger inflation data could solidify expectations for a December rate increase in its week-ahead inflation preview. Meanwhile, bitcoin exchange-traded funds saw $1.28 billion in outflows as December Fed hike odds climbed.

In October, the Federal Reserve kept its benchmark rate at 3.75% to 4%. At that time, Chair Kevin Warsh attributed tighter financial conditions to demand driven by artificial intelligence.

Which categories saw the sharpest price gains in October?

Food prices climbed 0.5% after no change in September. Grocery prices increased 0.4%, while restaurant meals rose 0.5%.

Energy costs advanced 0.7%, and seasonally adjusted gasoline prices jumped 1.0%. Gasoline was 37.4% higher compared with a year earlier, one of the few annual comparisons the BLS was able to report.

Housing, the largest component of the index, increased 0.3% following a 0.4% rise in September. Core prices had risen 0.2% in July and were unchanged in June.

All banks in the pre-release survey had underestimated the reading. Headline estimates varied from Morgan Stanley's 0.19% to Wells Fargo's 0.28%, while core projections ranged from Goldman Sachs's 0.16% to Jefferies's 0.24%.

Why was no annual inflation rate published?

The Bureau of Labor Statistics did not release a year-over-year inflation figure because it was unable to collect price data for October 2025 during the government shutdown that year. Consequently, no comparison base exists.

As a result, the monthly data bear the full significance of the report. Economists had anticipated annual headline inflation of 3.9% and core inflation of 2.8%, but these figures cannot be verified.

What could undermine the hot CPI reading?

Several data points suggest a different picture. The increase in energy prices decelerated markedly from September's 5.2%, and before seasonal adjustment, gasoline prices actually decreased 0.7% in October.

Bitcoin was already in decline before the CPI release. According to TradingView, it was trading near $75,000 earlier Tuesday and had fallen 1.85% in the 24 hours leading up to Monday morning, as reported by BeInCrypto Markets.

Outlook for December Fed rate hike expectations

Bond investors encounter another challenge on the same day. The 10-year note auction, included in a $125 billion Treasury sale, will now be priced against the backdrop of stronger inflation.

Producer price data will be released on Friday. Economists project that the Federal Reserve's preferred measure, core personal consumption expenditures (PCE), will show a 0.23% increase for October.

In the absence of an annual figure, the sequence of 0.3% core monthly readings represents the primary inflation trend available to the Fed ahead of its December meeting.