(New York, NY) - Bitcoin fell 3.8% to $65,900 after the latest Personal Consumption Expenditures (PCE) data showed persistent inflation, dampening hopes for a near-term interest rate cut from the Federal Reserve.
"The market was positioned for a softer inflation print, which would have kept a June rate cut on the table," said Nina Volkov, a former fixed income trader and now a crypto analyst. "The 2.9% core PCE number was a cold shower, and we saw an immediate risk-off reaction across all assets, with Bitcoin leading the way down."
The sell-off was exacerbated by a cascade of liquidations in the derivatives market. According to data from Coinglass, over $420 million in long positions were liquidated across major exchanges in the last 24 hours, with the majority of liquidations occurring on Binance and OKX. Open interest in Bitcoin futures has fallen by 15% to $30.2 billion, indicating a significant reduction in leverage.
The hot inflation data has led to a dramatic repricing of interest rate expectations. According to the CME FedWatch Tool, the probability of a rate cut at the June FOMC meeting has plummeted from 65% yesterday to just 30% today. This shift has strengthened the US dollar, with the DXY index climbing 0.5% to 104.80, putting further pressure on dollar-denominated assets like Bitcoin. The next key support level for Bitcoin is at the $62,500, which corresponds to the 50-day moving average.
This article is for informational purposes only and does not constitute investment advice.
