Crypto markets tumble as inflation data triggers $1 billion in liquidations

What happened

Bitcoin fell below $80,000 on Thursday morning, marking its lowest point in over a month, as crypto markets absorbed a shock from unexpected inflation data. The move sent reverberations across digital assets, triggering forced selling of leveraged positions. By midday, BTC recovered slightly to around $82,000, but the damage to overleveraged traders was already done.

The selloff extended across the market. Ethereum and XRP both dropped close to 5%, while Zcash sank almost 10%. Only five coins in the top 100 managed gains above 1%, signaling broad weakness across risk assets.

Nearly $1 billion in crypto liquidations unfolded in a single day. Exchange data showed 177,440 traders were liquidated for a combined $948.22 million, with long positions accounting for $858.96 million or 90.6% of the total. Ethereum led the damage with $282.03 million wiped out, followed by Bitcoin with a little over $200 million. The largest single liquidation was a $12.03 million Bitcoin long on Binance, forced closed at $80,208.96.

This marked the third-heaviest day for long liquidations in the past 90 days. The selloff followed a cascade where falling prices forced long-position holders to close, adding further selling pressure. Exchange data revealed Binance led with $515.12 million in liquidations, while Hyperliquid reported $141.14 million and Bybit registered $101.12 million.

Why it matters

The liquidations were triggered by inflation data that came in hotter than expected. Consumer prices rose 3.7% year over year in September against a 3.6% forecast, while core inflation came in at 2.6% versus 2.5% expected. A day later, the Producer Price Index jumped 6.3% annually, well above the 5.5% forecast.

Much of the inflation pressure stems from energy costs. Brent crude traded near $104 a barrel, about 70% above year-ago levels amid geopolitical tensions. Higher oil prices feed into fuel, shipping, and transportation costs, pushing inflation broadly higher.

The data shifts incentives away from risk assets. Hot inflation pushes the Federal Reserve toward higher interest rates, which lifts Treasury yields. A bond paying around 5% with minimal risk makes leveraged crypto bets less attractive, while higher rates make borrowing pricier and strengthen the dollar, draining the cheap money that leveraged traders depend on. The crypto market cap fell 2.7% to $2.81 trillion, though trading volume surged 49% to $111 billion.

Iliya Kalchev, analyst at Nexo, characterized the selloff as a broader risk-off event rather than a Bitcoin-specific story. Stocks and copper fell while gold rose, and South Korea's Kospi dropped 8%. Bitcoin slipped to the bottom of the $81,000 to $87,000 range it had held since late September, with $80,000 emerging as a critical level to watch.

What the data shows

On the daily chart, Bitcoin broke below $81,603, the strongest upper support from its August-to-October rally that ran from $62,763 to $87,422. The decline extended to $79,711 before buyers pulled the price back near $80,925. The Relative Strength Index fell to about 44, below the 50 midpoint that separates bullish from bearish momentum, though the longer-term uptrend remains intact via a golden cross.

Bitcoin currently trades roughly 2% below the average cost of U.S. spot ETF holders, which stands near $82,300. After holding above that level on 21 of the 24 days since September 21, reclaiming it becomes the first test for any rebound. A daily close back above $81,603 would reopen the path to $84,245 and the $87,422 swing high. Losing $80,286 would expose $78,002 as the next support level, with $75,092 providing further downside.

Background

Some analysts remain bullish on crypto despite near-term volatility. Citi recently raised its 12-month Bitcoin target to $113,000 and Ether target to $3,028 on October 1, citing stronger activity, a supportive macro backdrop, and ETF inflows.

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