Bitcoin Faces Stress Test From U.S. Core PCE Inflation Data

The Personal Consumption Expenditures (PCE) price index, released by the US Commerce Department's Bureau of Economic Analysis (BEA), is a key gauge used by the Federal Reserve to assess inflation and set interest-rate policy. The May reading rose to a three-year high, cooling expectations for the timing of rate cuts. US stocks weakened, weighing on risk assets and exposing Bitcoin to concentrated selling pressure.

Bitcoin plunged to $58,000 following the US May PCE data, marking a 21-month low, while inflation concerns also sent US stocks lower in volatile trading. The rapid correction triggered cascading closures of leveraged positions, with more than $600 million liquidated across the cryptocurrency market in just one hour. Some traders questioned whether the market had been “manipulated.”

The US consumer price index is a key gauge used by the Federal Reserve in setting interest-rate policy. Core CPI, which excludes volatile food and energy prices, offers a clearer view of underlying price pressures. Weaker-than-expected core inflation typically supports risk assets such as Bitcoin because rising expectations of rate cuts can improve liquidity and investor appetite.

The latest data showed that higher energy prices lifted headline US inflation, while core inflation slowed, prompting a short-term rebound in crypto markets. Bitcoin recovered to about $62,600 and held up better over the week than other tokens. Investors will next focus on the Federal Reserve’s interest-rate meeting and Chair Jerome Powell’s comments on the timing of rate cuts.

Bitcoin is often viewed as a highly volatile risk asset, yet its price has remained relatively steady as the conflict involving Iran intensifies and concerns over energy supplies and inflation mount. Markets are also awaiting the U.S. Commerce Department's PCE price index for clues on the Federal Reserve's interest-rate path, while Trump has again publicly called on the Fed to cut rates.

As of April 13, Bitcoin had broken above $72,000 and was advancing toward $73,000. BTC held above $71,000 even after Trump warned of possible strikes on Iran's oil-rich Kharg Island. Traders maintained an $80,000 price target, underscoring Bitcoin's outperformance against most macro assets weighed down by the war and economic data.

The US Bureau of Labor Statistics' core Consumer Price Index (CPI) excludes volatile food and energy prices. It is a key gauge used by the Federal Reserve to assess inflation trends and interest-rate policy. Cooling inflation data typically benefits risk assets and can also affect cryptocurrencies such as Bitcoin.

US core CPI rose 0.2% month on month in March, below market expectations of 0.3%. Bitcoin climbed to about $72,400 after the data was released and briefly touched $73,000 intraday. However, markets still see little likelihood of a Federal Reserve rate cut in April.

The US Commerce Department's personal consumption expenditures (PCE) price index is a key gauge the Federal Reserve uses to assess inflation and set interest-rate policy. Core PCE excludes volatile food and energy prices. A renewed rise in inflation would leave less room for rate cuts, while Bitcoin could swing as expectations shift for the dollar, bond yields and funding costs.

Markets expect the annual core PCE rate for January to rise to 3.1%, its biggest increase since April 2024. A reading in line with or above expectations could further reduce the likelihood of a Fed rate cut in June. Bitcoin has recently risen alongside cryptocurrencies and US stocks, renewing market focus on the $74,000 level, but shifting rate expectations continue to amplify short-term volatility.