Solana and XRP fell harder than Bitcoin on Tuesday as hotter-than-expected US inflation fuelled bets on a Federal Reserve rate rise, deepening a sell-off across the cryptocurrency market.

Bitcoin fell below 74,000 dollars after October's consumer price index came in above forecasts, trading at around 73,660 dollars, down 1.3 per cent over the previous 24 hours. But the larger altcoins fared worse: Solana fell more than 3 per cent to around 84 dollars, Ripple's XRP dropped around 3 per cent to 1.06 dollars, and Ethereum tumbled around 2.8 per cent to roughly 2,000 dollars.

The overall cryptocurrency market shed around 1.8 per cent in the last 24 hours and was under threat of slipping below the 2.5 trillion dollar mark.

Hot inflation raises rate-hike bets

The consumer price index rose 0.4 per cent in October from September, against economists' expectations of a 0.3 per cent increase. Prices had risen 0.6 per cent in September. Core inflation, which excludes food and energy, increased 0.3 per cent, also above the 0.2 per cent forecast.

The data strengthened expectations that the Federal Reserve will raise interest rates at its meeting on 9 December. Futures markets put the probability of a quarter-point increase, which would take the federal funds rate to a range of 4 per cent to 4.25 per cent, at 89 per cent, according to the CME FedWatch tool, with an 11 per cent chance of a larger half-point move. That was a shift from last week, when markets assigned about a 70 per cent probability to any rate increase in December.

Higher rates tend to hurt cryptocurrencies, which do not pay interest, and the inflation report set off a wave of forced selling. Around 200 million dollars in crypto positions were liquidated in the hour after the report, with more than 179 million dollars of that coming from long positions. Over the previous 24 hours, liquidations totalled about 360 million dollars, including 282 million dollars in bullish bets, according to CoinGlass data cited by Stocktwits.

XRP at lowest since August

XRP has been hit particularly hard. The token fell to 1.07 dollars, its lowest price since August, losing 12 per cent in a week. It is now down 37.06 per cent from its mid-August high of 1.70 dollars.

Demand for the token continues to weaken. Spot XRP exchange-traded funds recorded 10.42 million dollars in outflows on 9 November, and activity was also weak last week, with no inflows and only one day of outflows worth 529,000 dollars on 2 November.

Frustrated holders have been asking Ripple, the company behind the XRP Ledger, for answers. Ripple chief technology officer David Schwartz responded on social media that there was no secret plan to push the price higher, saying the company talked about its plans constantly and that XRP's price was largely dragged around by the market.

Schwartz added that XRP should still capture value if the XRP Ledger itself succeeds, and that a higher price would make the token more efficient as a liquidity asset for larger payments, with less slippage.

Bitcoin below its election-night low

Bitcoin's decline took it below the roughly 75,700 dollar low it reached on election night last week, and retail sentiment around the token continued to trend in bearish territory on Stocktwits.

Over the past week, Bitcoin is down about 3 per cent, while Ethereum and Solana have fallen about 6 per cent and 7 per cent respectively, underlining how the latest leg of the sell-off has spread well beyond the largest token.

Traders will now watch whether Bitcoin can hold above 73,000 dollars, the level analysts have flagged as near-term support, and whether the Federal Reserve's December meeting brings the rate rise the market has now priced in.