Bitcoin Crashes to $58K as US PCE Inflation Rises to 3-Year High at 4.1%

Bitcoin extended its decline on Thursday, plunging to $58,000 as the latest US PCE inflation data revealed price increases had soared to a three-year high, suggesting the Federal Reserve may need to maintain tight monetary policy for even longer.

The US Bureau of Economic Analysis (BEA) reported that the Personal Consumption Expenditures (PCE) price index was up 4.1% in May on a year-over-year basis, much higher than the previous reading of 3.8%. The headline measure of PCE inflation rose by 0.4% on the month. Although both the monthly and yearly rises were slightly below Wall Street expectations of 4.2% and 0.5%, the data still weighed on Bitcoin and the overall crypto market. Despite softer-than-expected data, inflation has risen to double the Fed’s 2% target.

At press time, the Bitcoin price slumped 4.98% to $58,183.51 on Thursday, June 25. This crash triggered $212.35 million in long liquidations within the one-hour timeframe, according to CoinGlass.

Core PCE, which excludes food and energy prices, rose by 0.3% for the month, marking an increase of 3.4% year-over-year to May last year.

The report also cited ongoing robust demand from consumers. Spending rose $43.8 billion, or 0.3%, in May in real PCE after adjusting for inflation. Consumer spending grew from $156.1 billion, driven by a $94.3 billion gain in services spending and a $61.8 billion gain in purchases of goods.

Personal income rose by $181.6 billion, or 0.7%, in May in the BEA report. Per capita disposable income also increased by 0.7%, but personal outlays grew by $159.9 billion. Personal savings amounted to $704.2 billion, and the personal saving rate was 3.0%.

Signs of economic strength joined the US data release, showing some recovery. First-quarter GDP growth was revised up to 2.1%, reflecting stronger-than-expected performance. Market participants are now eyeing the Federal Reserve’s next move.

Amid this backdrop, the crypto market erased millions in value with $1.34 billion in total liquidations. High inflation indicators typically have a negative impact on risk-sensitive assets, as elevated inflation could prompt the Fed to hike interest rates, potentially leading to liquidity contraction in the Bitcoin and crypto market.

Source: https://coingape.com/bitcoin-crashes-to-58k-as-us-pce-inflation-rises-to-3-year-high-at-4-1/