Key facts
- Bitcoin fell below $78,000 after the release of U.S. PCE inflation data.
- The headline PCE inflation rate increased by 0.2% month-on-month, exceeding expectations.
- Annual PCE inflation rose to 3.7%, surpassing the 3.6% forecast.
- Core PCE inflation remained unchanged at 3.3% annually.
- The inflation figures indicate price pressures remain above the Federal Reserve's 2% target.
Bitcoin experienced a price drop below $78,000 on Wednesday, reacting to the latest U.S. Personal Consumption Expenditures (PCE) inflation report. The data indicated higher-than-expected price pressures, impacting risk assets and Treasury yields.
The headline PCE price index rose by 0.2% in July from the previous month, surpassing the 0.1% increase that economists had predicted. Annually, PCE inflation stood at 3.7%, exceeding the forecast of 3.6%. The core PCE, which excludes volatile food and energy prices, saw a 0.2% monthly increase, aligning with expectations, and its annual rate remained unchanged at 3.3%.
These inflation figures keep the Federal Reserve's preferred gauge of price growth significantly above its 2% target. The annual PCE rate, which had reached 4.1% in May, has now settled back to 3.7%. The stronger-than-expected headline reading triggered renewed selling pressure across risk assets as traders reassessed the potential implications for U.S. monetary policy. Treasury yields also climbed following the inflation data release, reflecting concerns that persistent price growth could limit the Federal Reserve's ability to implement looser monetary policies.
Prior to the pullback, Bitcoin had briefly surged above the $80,000 level, reaching an intraday high of $81,235.03, marking its first time trading above this threshold since May. The subsequent drop brought BTC back into the $78,000 range, testing the resilience of its recent rally.