• Bitcoin hit an 11-week low of $73,588 after U.S. inflation data, according to LSEG (LSE:LSEG).
  • The drop extends a selloff driven by ETF outflows and regulatory uncertainty ahead of the midterm elections.
  • Analysts warn that a hot core inflation reading could push prices below $70,000.

Bitcoin tumbled to an 11-week low of $73,588 on Tuesday, according to a headline from LSEG, as freshly released U.S. inflation data heightened concerns that the Federal Reserve may need to keep interest rates higher for longer. The move underscores the cryptocurrency's sensitivity to macroeconomic indicators and monetary policy expectations.

The slide came after Bitcoin failed to capitalize on a broader stock-market rebound on Monday, when the S&P 500 gained 2.3% and the Nasdaq rose 2.7%. Instead, the largest digital asset remained under pressure, extending a decline that had already pushed it below $75,000 last week for the first time since August. Ether also weakened, trading near $2,120 in early Tuesday activity.

Market participants had been bracing for the October consumer price index report, with economists expecting monthly increases of 0.3% for headline CPI and 0.2% for core CPI. The actual figures were not immediately available, but the mere release of the data appeared to amplify selling pressure. Persistent inflation could reinforce expectations of another rate hike in December; before the report, more than 84% of traders were already pricing in such a move, according to CME (NASDAQ:CME) FedWatch data cited by Dow Jones.

The inflation backdrop has been deteriorating. September's CPI showed headline prices rising 0.6% month-over-month and 3.7% annually, up from 3.4% in August. Core CPI climbed 0.3% monthly and 2.6% annually. Gasoline prices surged 9.1% in September, accounting for more than half of the monthly headline increase. Those figures had already raised alarms about persistent cost pressures.

"Inflation is proving stickier than hoped, and that's bad news for risk assets like Bitcoin," said a market strategist who requested anonymity to speak candidly. "The crypto market is now hostage to every data point that could influence the Fed's next move."

Beyond inflation, the digital-asset market faces its own set of headwinds. U.S. spot Bitcoin ETFs saw approximately $201 million in outflows on Monday, following more than $1.2 billion the previous week, according to data from SoSoValue cited by Investing.com. The withdrawals suggest institutional investors are retreating amid the uncertain macroeconomic environment.

Political uncertainty is adding to the mix. Early reporting on Tuesday pointed to concerns following the Democratic midterm-election victory, with investors worried about potential increased scrutiny of the crypto industry. While no new regulations have been announced, the political shift has injected additional caution into the market, according to Dow Jones and Investing.com.

Analysts are watching key technical levels. "A core monthly reading above 0.2% could strengthen the case for a December rate hike and make a recovery above $76,450 more difficult," said Vikram Subburaj, CEO of Giottus, in a note. Crypto Finance identified limited support below $73,700, with $70,000 as a critical downside level to watch. On the upside, $76,300 and $78,700 could serve as recovery targets if the macro backdrop improves.

The next direction for Bitcoin will depend on the actual inflation figures and their impact on rate expectations, as well as whether ETF outflows continue. For now, the market remains on edge, with the $73,588 low serving as a stark reminder of the asset's vulnerability to shifting monetary policy tides.

Correction: An earlier version of this article misstated the date of the U.S. midterm elections. It was November 8, not November 10.