Bitcoin fell to $58,000 on Thursday before partially recovering, extending a correction that has pushed the world's largest cryptocurrency to its lowest levels since late 2024, as a hotter-than-expected core PCE inflation reading stoked fears that the Federal Reserve will keep interest rates elevated for longer.
The May Personal Consumption Expenditures price index — the Fed's preferred inflation gauge — showed core prices rising 3.4% year-over-year, its highest level since October 2023, while the headline index accelerated to a 4.1% annual rate driven in part by higher energy prices. Monthly core PCE ticked up 0.3%.
"Bitcoin deepens its correction as inflation strengthens the Fed's hawkish stance," Simon-Peter Massabni, Head of Retail Sales at XS.com, said. The data confirms the Federal Reserve is unlikely to pivot toward rate cuts in the near term, he added, with the central bank already showing less willingness in recent communications to consider easing.
Can-Luca Koymen, investment strategist at Sygnum Bank, read the print similarly.
"This is a print-by-print Fed now, and the number that also matters is this core PCE print, not just CPI, since that's the Fed's preferred gauge," Köymen said.
