Bitcoin dropped below the key $60,000 level on Thursday after the Federal Reserve’s preferred inflation measure reached its highest point since 2023.
The hotter-than-expected inflation data strengthened expectations that the Fed could keep interest rates elevated for longer. It also revived speculation that policymakers may consider another rate increase.
Bitcoin fell approximately 3% to an intraday low of $59,297 by 10:09 ET. The cryptocurrency remained close to the 18-month low recorded earlier in June.
Higher Inflation Pressures Bitcoin
The latest inflation report added to concerns about the future direction of U.S. monetary policy.
The core Personal Consumption Expenditures price index, which excludes volatile food and energy costs, increased by 0.3% during the month. On an annual basis, core PCE inflation reached 3.4%, its highest level since October 2023.
Meanwhile, the headline PCE index climbed to an annual rate of 4.1%. That marked its highest reading since April 2023.
Rising energy costs linked to the Iran war contributed heavily to the increase. However, investors are also concerned that inflationary pressure is spreading into other parts of the economy.
Federal Reserve Adopts a More Hawkish Position
The inflation data arrived shortly after the Federal Reserve adopted a tougher position on rising prices.
During its June meeting, the Federal Open Market Committee removed language that had previously suggested future interest rate cuts. Instead, officials emphasized their commitment to restoring price stability.
The Fed also removed a previously projected rate reduction for this year. At the same time, policymakers indicated that another interest rate increase remained possible.
Several officials had already expressed concern during the April meeting that the central bank’s guidance appeared too supportive of lower rates.
Tariffs Add to Inflation Concerns
Federal Reserve officials often look beyond temporary inflation caused by supply disruptions. However, the latest data suggests that price pressures may be expanding beyond energy.
Tariffs are also increasing costs across parts of the economy. This makes the current inflation trend more difficult for policymakers to dismiss as temporary.
A prolonged period of high interest rates could continue to weigh on Bitcoin and other cryptocurrencies. Unlike bonds and savings products, crypto assets do not produce interest income.
Bitcoin ETF Outflows Accelerate
Selling pressure also increased across U.S. spot Bitcoin exchange-traded funds.
Spot Bitcoin ETFs recorded net outflows of approximately $469 million on Wednesday. This represented their largest daily withdrawal since June 2.
The funds were heading toward a seventh consecutive week of outflows. The trend suggests that both institutional and retail investors are reducing their exposure to cryptocurrency.
Glassnode data also showed Bitcoin trading at a significant discount on Coinbase compared with the global market average. This pattern may indicate limited demand from U.S. retail investors.
Investors Shift Toward AI Stocks
Bitcoin has gradually lost momentum as investors move toward assets with clearer earnings and fundamental value.
Artificial intelligence stocks have become a major destination for this capital. Global semiconductor shares rallied sharply on Thursday following strong earnings from memory chip manufacturer Micron.
The continued shift toward AI-related companies may be drawing liquidity away from Bitcoin and other speculative assets.
Ethereum and Altcoins Fall After PCE Report
The broader cryptocurrency market also declined following the release of the PCE inflation data.
Ethereum dropped approximately 5% to $1,566.47. XRP and Solana fell around 3% each, while Cardano declined by 1.4%.
BNB lost 3.1%, while major meme coins also came under pressure. Dogecoin fell by 3.9%, and the TRUMP token dropped approximately 5%.
Crypto traders will now closely monitor Federal Reserve commentary, ETF flows and upcoming inflation reports. These factors could determine whether Bitcoin stabilizes near $60,000 or extends its decline.
