Concerns are mounting among traders as rising inflation raises questions about how the Federal Reserve will react to the growing economic uncertainty. These fears have impacted the cryptocurrency market.
Summary:
- The Federal Reserve’s preferred inflation indicator, the PCE price index, climbed 2.7% in August.
- Although the inflation increase met expectations, it marked a rise compared to the previous month.
- Institutions are starting to lock in profits, according to experts.
Bitcoin price has dropped below $110,000, mainly driven by the latest inflation data. As of September 26, Bitcoin was trading at $109,640, down 1.6% for the day, bringing the weekly loss to 5.5%. The recent inflation figures seem to be the primary factor behind the price dip.
The Department of Commerce reported that the PCE price index rose 2.7% in August, slightly up from July’s 2.6% increase. The core PCE index, excluding food and energy, also rose by 0.2%, the same as the revised figure from July.
While the PCE inflation rate aligned with forecasts, the acceleration of inflation has added to a more cautious economic outlook. This uptick follows the Federal Reserve’s first rate cut of the year, made in response to concerns about low employment and economic growth.
Impact of Rising Inflation on Bitcoin
As inflation continues to rise, the Federal Reserve is less likely to keep cutting rates, which could hurt high-growth assets like Bitcoin (BTC), which typically thrive in low-interest-rate environments. Arthur Azizov, founder and investor at B2 Ventures, suggests that this has prompted institutional investors to take profits.
Azizov also pointed out that the $108,000 to $108,500 range is now a key support level for Bitcoin. If the price falls below this range, it could drop to between $90,000 and $95,000.
