Bitcoin Under Pressure As US Inflation Fears Persist

The weakness of American consumers would normally have strengthened expectations of rate cuts and supported bitcoin. But the simultaneous rise in inflation expectations creates a less favorable scenario: a fragile economy without rapid monetary easing.

Household weakness no longer guarantees a rate cut

The University of Michigan consumer confidence index stood at 48 points in October, compared to 48.1 in September. This monthly stability masks a still very degraded level, 10.4% lower than that of October 2025 and 15% below that of February.

Current economic conditions mainly declined by 8.3% in one month, from 50.9 to 46.7 points. Households therefore judge their immediate situation as more difficult, especially when considering expensive purchases. Conditions for acquiring durable goods have dropped by 18%, due to prices and borrowing rates.

Several indicators describe this risk of slowdown accompanied by persistent inflation :

• Overall confidence remains close to its historical lows ;
• Current economic conditions are strongly declining ;
• Conditions for purchasing durable goods drop by 18% ;
• One-year expected inflation reaches 4.7% ;
• Long-term expectations rise to 3.5% ;
• Both inflation measures increase for the second consecutive month.

Joanne Hsu, survey director, stated :

Purchasing power continues to dominate consumers’ perception of the economy.

Households simultaneously face high prices and more costly credit, while their prospects remain fragile.

This configuration calls into question a mechanism usually favorable to bitcoin. Economic deterioration often leads to expectations of rate cuts, which reduce bond yields and free more liquidity for risky assets. But this mechanism works poorly when inflation remains high.

Price expectations complicate the Fed’s calculation

American consumers anticipate inflation of 4.7% over the next twelve months, compared to 4.6% in September and 3.4% in February. Over the long term, their expectations have risen from 3.4% to 3.5%, a level higher than the 2.8% to 3.2% range observed in 2024.

These figures do not correspond to a measure of actual observed inflation. They reflect households’ perceptions, according to on-chain data. The distinction is important, but the Federal Reserve monitors these surveys because behaviors may eventually turn forecasts into reality.

Consumers convinced that prices will rise may bring forward some purchases. Employees may demand higher wages and companies may adjust their prices. This chain of decisions risks sustaining inflation even after the initial shock disappears.

The historical study published on October 23 by the University of Michigan shows that long-term expectations and their degree of uncertainty exceed comparable levels of 2019 and 2024. Joanne Hsu nonetheless believes that durable entrenchment is still avoidable and that the impact of anticipated purchases is not yet measured.

The Fed thus faces two opposing signals. Weak morale and large purchases argue for caution so as not to further slow the economy. High price expectations, on the contrary, prompt it to maintain a restrictive policy.

Bitcoin loses support from the “bad news” scenario

For bitcoin, the main risk is not just another rate increase. It lies in their remaining at a high level for a longer period, even as economic activity slows.

In a classic cycle, disappointing economic data can become good news for markets. Investors then anticipate looser monetary policy, lower bond yields, and improved financing conditions. This scenario has often supported tech stocks and cryptos.

A situation close to stagflation reverses this logic. The Fed cannot quickly cut rates because inflation remains too high, but it also cannot raise them aggressively without worsening the slowdown. Markets are then left without visibility and new liquidity.

Bitcoin, near 80000 dollars, already operates in an environment marked by irregular ETF outflows and high sensitivity to US yields. A 2023 International Monetary Fund study concluded that monetary tightening reduced demand for cryptocurrencies comparably to its effect on stocks.

The next test will be the publication of the PCE index on October 29, the day after the Fed’s decision. A slowdown in prices would restore the possibility of future easing. A new inflation surprise would instead strengthen the toughest scenario for bitcoin: a less dynamic economy but persistently high rates.