Bitcoin Falls Below $78K as Hot PCE Inflation Rattles Crypto

Bitcoin slipped below $78,000 on Wednesday after hotter-than-expected U.S. Personal Consumption Expenditures (PCE) inflation data raised concerns about the Federal Reserve’s monetary policy outlook. The pullback came only hours after BTC surged above $80,000, highlighting heightened volatility across the crypto market.

Bitcoin briefly recovered to around $78,043 following the decline but remained down about 0.64% over the previous 24 hours. Earlier in the session, BTC reached an intraday high of $81,235.03, marking its first move above the $80,000 threshold since May.

The latest data from the U.S. Bureau of Economic Analysis showed that the headline PCE Price Index increased 0.2% month-over-month in July. Economists had expected a smaller 0.1% increase. On an annual basis, PCE inflation remained at 3.7%, slightly above the 3.6% market forecast.

Core PCE inflation, which excludes volatile food and energy prices, rose 0.2% from the previous month, matching expectations. The annual core PCE reading remained unchanged at 3.3%, also in line with economists’ estimates.

The figures showed that inflation remains significantly above the Federal Reserve’s 2% target. Although annual headline PCE inflation has eased from 4.1% in May to 3.7%, persistent price pressures could complicate expectations for looser U.S. monetary policy.

The stronger headline inflation reading pressured risk assets as investors reassessed the outlook for interest rates. U.S. Treasury yields also climbed following the PCE report, reflecting concerns that stubborn inflation could limit the Federal Reserve’s ability to ease policy.

For Bitcoin, the reaction interrupted a powerful rally that had pushed the cryptocurrency beyond $81,000. BTC’s retreat toward $78,000 now puts the strength of its recent breakout under scrutiny as traders weigh inflation, Treasury yields and future Fed policy.

With Bitcoin price volatility elevated, investors will closely watch whether BTC can reclaim the $80,000 level or face additional selling pressure following the latest U.S. inflation data.