Hotter US core inflation sparked a fresh wave of liquidations within an hour, putting Bitcoin's improving spot demand and fragile recovery to the test.

Bitcoin fell below $83,000 on Wednesday as hotter-than-expected US core inflation data revived expectations of further Federal Reserve interest rate hikes, triggering a fresh wave of liquidations across the cryptocurrency market.

CoinGlass data showed that over $100 million in leveraged positions were liquidated in the hour after the inflation report was released. This also pushed total liquidations above $220 million over 24 hours.

The sharp increase in forced selling highlighted how quickly traders reacted to renewed inflation pressures and the prospect of tighter US monetary policy.

According to the Bureau of Labor Statistics, consumer prices increased 3.7% annually in September, above the 3.6% forecast and August's 3.4% reading. Headline consumer prices rose 0.6% during the month, matching expectations, while core prices increased 0.3%, above the 0.2% consensus estimate.

On an annual basis, core inflation accelerated to 2.6% from 2.4%, suggesting that underlying price pressures remain persistent even after excluding volatile food and energy costs. This marks the 67th consecutive month US inflation has stayed above the Fed's 2% target.

Energy remained the biggest contributor to inflation, reflecting the economic fallout from the ongoing US-Iran conflict. Gasoline prices surged 9.1% during September, accounting for more than half the increase in headline CPI, while the broader energy index climbed 5.2%.

However, inflationary pressures spread to other parts of the economy. 7%, and higher prices were also recorded for recreation, education, air travel and medical services.

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