Bitcoin falls amid inflation concerns and ETF outflows

Bitcoin (BTC) extended its losses on Thursday, falling below $81,000 as hotter-than-expected US inflation data weighed on market sentiment. Institutional demand also weakened, with US spot Bitcoin exchange-traded funds (ETFs) recording net outflows of more than $261 million on Wednesday.

Meanwhile, investors are awaiting Thursday's US Producer Price Index (PPI) report and a speech by Federal Reserve Chair Kevin Warsh on Friday for fresh clues about the monetary policy outlook, which could determine the next move for the world's largest cryptocurrency.

Persistent inflation weighs on risk assets

US Consumer Price Index (CPI) data released on Wednesday showed that annual inflation accelerated to 3.7% in September, exceeding expectations and rising from 3.4% in August.

Core CPI, which excludes volatile food and energy prices, rose 2.6% year-on-year during the same month, compared with 2.4% in August. On a monthly basis, headline and core CPI increased by 0.6% and 0.3%, respectively.

The elevated readings pointed to broadening inflationary pressures, strengthening market expectations that the Federal Reserve would continue tightening monetary policy.

According to CME Group's FedWatch tool, markets are currently pricing in a 27% probability of a 25-basis-point interest rate hike at the Fed's October policy meeting, up from 17% last Friday.