- On Friday, Bitcoin experienced a 4% drop as core PCE inflation data triggered a market-wide sell-off.
- In February, the Core PCE increased to 2.8%, surpassing the anticipated 2.7%.
- Leading altcoins like Ethereum, XRP, and Solana also recorded losses, reversing gains made earlier in the week while both the crypto and stock markets faced corrections.
Bitcoin (BTC) and the broader crypto market took a hit on Friday after the announcement of February’s core Personal Consumption Expenditure (PCE) data, a key inflation metric favored by the Federal Reserve.
Crypto and stock markets dip as inflation figures raise market concerns
On Friday, the crypto market underwent a correction as macroeconomic data led to investor anxiety. The US core PCE Price Index, which excludes fluctuating food and energy prices, grew by 2.8% year-over-year in February, exceeding the market’s expectations of 2.7%.
The mix of elevated inflation figures and threats of tariffs from President Donald Trump led to substantial losses across the crypto market, with Bitcoin falling 4% below the $84,000 mark.
Data from Glassnode indicates that much of the recent selling pressure and realized losses in the Bitcoin market can be attributed to Short-Term Holders (STH)—investors who have held their BTC for less than 155 days.
This decline follows a rise in long-term inflation expectations, which reached 4.1%, the highest level since 1993. Year-to-date inflation expectations have also jumped to 5%, up from 2.6% over the past three months amid Trump’s tariff announcements, according to the latest University of Michigan survey.
“Tariff front-running has contributed to a trade deficit exceeding $300 BILLION in just two months, and consumer sentiment has plummeted,” noted a financial commentary on X.
The unease in the crypto sphere underlines its increasing correlation to the stock market, which also suffered noticeable declines following the revelation of the February PCE data. The S&P 500 dropped nearly 2%, erasing over $1 trillion from its market capitalization, while the NASDAQ 100 fell by more than 2% during the day.
“In March, the percentage of consumers forecasting higher stock prices over the next year dropped by 9.3 points to 37.4%, marking the lowest level in a year and the largest monthly decrease since March 2020,” the financial commentary highlighted.
Altcoins were similarly affected in the market slump, with Ethereum (ETH), XRP, Solana (SOL), and Dogecoin (DOGE) all losing earlier gains from the week.
Top cryptos. Source: CoinGecko
Moreover, various significant crypto sectors also experienced declines, with the artificial intelligence (AI) sector down more than 7% since the market turmoil began. Leading AI tokens like NEAR, Bittensor, and Render saw declines of 10.8%, 10%, and 8%, respectively, at the time of this report.
Other sectors facing losses included the meme coin and real-world asset (RWA) sectors, which suffered declines of 8% and 5%, respectively.