Bitcoin Price Declines Amid Rising Inflation and Tariff Uncertainty
Bitcoin fell below $85,000 due to rising inflation and tariff uncertainties, with the core PCE index rising 0.4% in February. Altcoins, particularly Ethereum, experienced significant declines. Concerns over inflation and its effect on consumer spending and economic stability were highlighted, alongside investor anticipation of upcoming tariffs.
Bitcoin experienced a decrease, dropping below $85,000 on Friday, as investors reacted to a higher-than-anticipated inflation report amidst uncertainties regarding tariffs announced by U.S. President Donald Trump. The core Personal Consumption Expenditures Price Index (PCE) recorded a 0.4% increase for February, the largest monthly rise in over a year, exceeding economists’ expectations of 0.3%.
The PCE index’s annual increase of 2.8% also surpassed predicted levels of 2.7%. This core measure excludes fluctuating food and energy prices, offering a clearer view of underlying inflation trends important to economists. As of the latest data from CoinGecko, Bitcoin was on track for a 2.3% weekly gain despite dropping to below $85,000, reflecting a 3.3% decline from the previous day.
Ethereum led the retreat among altcoins, falling 4.7%, while Solana dropped 5.8% to $129, and XRP decreased 5.7% to $2.20. Research analyst Matt Mena from 21Shares described Bitcoin as “a non-sovereign, inflation-resistant asset” that exhibits resilience during varying market conditions.
Consumer spending recorded a 0.4% increase in February, which reversed a 0.3% decline from January but failed to meet expectations of a 0.5% rise, indicating potential lag in the U.S. economy due to rising inflation. Carlos Guzman from GSR stated this inflation report could intensify concerns about prolonged inflation, hinting at the risk of stagflation.
Investors are preparing for a tariff deadline, with new tariffs set to be implemented next week, following President Trump’s announcement of a 25% tariff on vehicle imports. In contrast, gold prices surged to $3,080 per ounce, a record high, as investor sentiment shifted along with developments in Trump’s trade policy. Mena also noted that the rising core PCE might lead the Federal Reserve to maintain current interest rates at its upcoming meeting.
The article outlines the recent decline in Bitcoin prices in response to increased inflation rates, particularly influenced by the core PCE index. Despite short-term volatility, Bitcoin’s resilience is emphasized. The broader implications of inflation on consumer spending and upcoming tariffs are discussed, suggesting a cautious outlook for the U.S. economy. Investors are closely monitoring these developments as they could significantly impact financial markets.
Original Source: decrypt.co
Post Comment