Bitcoin fell below $82,000 on Tuesday as elevated oil prices and geopolitical tensions weighed on risk sentiment. Investors are watching the Federal Reserve's October 27-28 meeting, with traders pricing in a 75% chance of a rate hike in December.
Bitcoin was trading at around $81,793.2 on Tuesday, down about 1% on the day. Elevated oil prices and persistent geopolitical tensions pushed it lower while investors assessed the Fed's interest-rate outlook ahead of next week's policy meeting.
The cryptocurrency had risen above $83,000 in the previous session but failed to hold those gains. It has also struggled to sustain a recovery after retreating from levels above $85,000 earlier this month.
Oil hits a five-month high
Brent crude futures rose as high as $111.05 a barrel, a fresh five-month high. Attacks on Saudi Arabian infrastructure and continued disruption risks in the Middle East have kept energy markets on edge.
Higher fuel costs raise concerns about sustained inflation pressure. That could complicate the Fed's efforts to bring inflation back towards its 2% target and potentially limit its flexibility to ease monetary policy.
Fed meeting and rate expectations
Tighter financial conditions and elevated borrowing costs tend to weigh on risk-sensitive assets such as cryptocurrencies. Those assets have benefited in previous periods from expectations of easier monetary policy and improved liquidity.
Markets have scaled back expectations of an imminent rate hike, with FedWatch data showing an 18% probability of an increase at the upcoming meeting. Traders are pricing in a 75% chance of a hike in December.
Recent data reinforced those concerns. Consumer prices rose 3.7% year-on-year in September, while core inflation increased 2.6%, both slightly above economists' expectations. Gasoline prices jumped 9.1% during the month and accounted for more than half of the monthly increase in headline consumer prices.
Altcoins edge lower
Most altcoins also fell on Tuesday. Ethereum fell 1.3% to $2,398.92, and XRP fell 1% to $1.3011. Solana eased 1%, Cardano fell 1.4% and Dogecoin fell 0.5%.
Source: Investing.com
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