The cryptocurrency retreated from the $80,000 level—a key psychological barrier it has struggled to reclaim—as traders digested the fresh inflation figures. According to data from the Bureau of Economic Analysis, the core PCE price index, which excludes volatile food and energy costs, rose 0.2% month-over-month in July, marginally above the 0.1% consensus estimate. On an annual basis, core PCE held at 2.6%, still above the Federal Reserve’s 2% target.
The headline PCE index increased 0.2% from June and 2.5% year-over-year, also slightly hotter than anticipated. The report immediately pressured markets: Bitcoin slid to $77,832 at the time of writing, down roughly 3% on the day, while gold lost 0.8% and major US stock indices opened lower. The S&P 500 fell 0.6% in early trading, and the tech-heavy Nasdaq Composite dropped 0.9%.
Market participants had been hoping that cooling inflation would allow the Fed to begin cutting interest rates as soon as September. However, Wednesday’s data suggests the battle against price pressures is not yet won, potentially delaying a pivot to looser monetary policy. Higher interest rates tend to reduce the appeal of riskier assets like Bitcoin, which have benefited from low-rate environments in previous cycles.
The crypto market had been consolidating near $80,000 for several days, with bulls eyeing a breakout above resistance. The higher-than-expected PCE reading dashed those hopes for now, pushing Bitcoin back into the mid-$70,000 range, where it had traded during a volatile August. Analysts on Cointelegraph noted that Bitcoin's failure to hold above $80,000 could signal further downside if macro headwinds persist.