Bitcoin tumbled to $85,600 on Tuesday afternoon, its lowest level in two weeks, after the April CPI print crushed expectations for near-term Federal Reserve rate cuts and sent risk assets reeling across the board. The largest cryptocurrency by market cap is down 4.8% on the day, having touched an intraday low of $84,920 on Binance before recovering modestly. Ethereum fared worse, dropping 5.6% to $3,185, and the broader altcoin market is bleeding heavily.

The macro trigger is unmistakable. The core CPI reading of 0.5% month-over-month sent the 10-year Treasury yield surging 12 basis points to 4.57%, and the dollar index jumped 0.5% to 104.30. Bitcoin has historically traded with a strong negative correlation to real yields and the dollar, and Tuesday is a textbook example of that relationship in action. The CME FedWatch Tool’s September rate cut probability collapsed from 57% to 38%, and the market is now pricing in just one 25-basis-point cut for the entire second half of 2026. Six weeks ago, the market was pricing three cuts.

The liquidation data is ugly. According to Coinglass, total crypto long liquidations across centralized exchanges reached $452 million in the past 12 hours — the highest single-day flush since May 1. Bitcoin longs accounted for $218 million of that total, with Ethereum longs contributing $142 million. The liquidation cascade was most intense between 8:30 and 9:15 AM ET, immediately following the CPI release, as leveraged positions that had accumulated during last week’s rally to $92,000 were force-closed. Open interest across BTC futures contracts has dropped $1.4 billion to $16.8 billion, reflecting the de-leveraging.

Spot ETF flows turned negative in early data. While official net flow figures won’t print until after the close, Bloomberg Intelligence estimates that the eleven spot BTC ETFs are on track for approximately $180 million in net outflows — the first negative day in over a week. BlackRock’s IBIT, which had seen $98 million in inflows as recently as Monday, is showing a modest net outflow in midday data. Exchange balances, which had been declining steadily through May, ticked up 0.3% as panicked sellers moved coins to trading platforms.

Altcoins are getting hit disproportionately hard. Solana is down 7.2% to $149, Cardano has fallen 6.8%, and Chainlink is off 6.4%. The CoinDesk Market Index is lower by 5.3%, its worst single-day decline since the April 2 tariff-related sell-off. Perpetual funding rates on major exchanges flipped negative for the first time in May, suggesting that shorts are now paying to maintain positions and speculative appetite has fully reversed. The crypto market is recalibrating to a higher-for-longer rate environment, and the path of least resistance appears lower until the next macro catalyst.