Bitcoin Price Drops After PCE Inflation Accelerates, Institutions Take Profits

Inflation is accelerating, causing concerns among traders about the Fed’s potential response in light of macroeconomic uncertainty.

Crypto markets are down, with Bitcoin falling below $110,000 as rising inflation contributes to concerns about the Fed’s policy. On Friday, September 26, Bitcoin traded at $109,640, down 1.6% on the day, bringing the weekly decline to 5.5%. The likely catalyst for the negative price action is the latest inflation figures.

According to the Department of Commerce, the Personal Consumption Expenditures price index rose 2.7%, compared with a 2.6% increase in July. The core PCE index, excluding volatile components such as food and energy, increased 0.2% last month, while July’s reading was revised to 0.2%.

While PCE inflation matched expectations, the acceleration contributed to a more bearish economic outlook. Moreover, the increase comes after the Federal Reserve made its first rate cut this year, citing fears over low employment and growth.

With inflation accelerating, the Fed is less likely to stick to rate cuts. This will likely hurt high-growth assets such as Bitcoin (BTC), which thrive in a low-interest-rate environment. According to Arthur Azizov, founder and investor at B2 Ventures, this is causing institutional investors to take profits.

“Bitcoin’s drop below $109,000 is a sign that the market is overheated and moving into a slowdown phase. ETF inflows, being the main driver of this rally, have fallen by more than 50% in the past week, with just $930 million coming in compared to over $2 billion the week before,” Arthur Azizov, B2 Ventures told crypto.news.

He added that $108,000 to $108,500 is now the key zone for Bitcoin. A fall below that support could send BTC down to between $90,000 and $95,000.