Bitcoin moved lower on Wednesday, pulling back from recent three-month highs as investors reacted cautiously to fresh U.S. inflation data.
The Federal Reserve’s preferred inflation measure remained elevated in July, adding uncertainty over the direction of interest rates ahead of the central bank’s September policy meeting.
Bitcoin traded around 0.5% lower at $78,217.50 by 09:55 ET after briefly climbing above $80,000 earlier in the week.
Nvidia Earnings Add to Market Caution
Risk sentiment was also subdued ahead of Nvidia’s closely watched quarterly earnings report.
As one of the leading companies associated with the artificial intelligence boom, Nvidia’s results could influence broader market sentiment and appetite for risk assets over the coming weeks.
Cryptocurrencies have increasingly traded alongside other speculative assets, making major developments in technology stocks relevant to Bitcoin and the wider crypto market.
U.S.-Iran Diplomacy Helps Limit Bitcoin Losses
Improving geopolitical sentiment helped prevent a sharper decline in Bitcoin.
A Russian media report claimed that the United States and Iran had reached a ceasefire agreement that could be announced within days.
Oil prices moved lower following the report. Positive comments from Pakistan and renewed discussions between Iran and Oman regarding transit through the Strait of Hormuz also supported broader risk sentiment.
Any sustained reduction in geopolitical tensions could help ease concerns about energy prices and global inflation.
PCE Inflation Holds at 3.7%
The latest U.S. Personal Consumption Expenditures price index showed that inflation remained persistent in July.
Headline PCE increased 0.2% month over month, following a 0.1% decline in June.
On an annual basis, the index rose 3.7%, unchanged from the previous month and slightly above economists’ expectations for a 3.6% increase.
The report reinforced concerns that inflation may be taking longer than expected to return toward the Federal Reserve’s 2% target.
Core PCE Inflation Remains Firm
Core PCE, which excludes volatile food and energy prices, also showed persistent underlying inflation.
The index increased 0.2% from the previous month and 3.3% compared with a year earlier.
Both figures matched economists’ expectations.
Although the data did not deliver a major upside surprise, continued inflation pressure could encourage Federal Reserve officials to remain cautious about easing monetary policy.
Higher Rates Could Challenge Bitcoin’s Rebound
Bitcoin’s recent rally has partly been linked to the so-called debasement trade.
Investors have increasingly considered assets such as Bitcoin and gold as potential alternatives amid concerns over rising U.S. government debt, borrowing costs and possible long-term pressure on the dollar.
Recent Treasury measures aimed at stabilizing bond markets also helped fuel demand for alternative assets.
However, stubborn inflation could complicate that trade.
If inflation remains too high, the Federal Reserve could maintain restrictive interest rates or even consider further tightening. Higher rates typically support the U.S. dollar and can reduce demand for speculative assets such as cryptocurrencies.
Bernstein Sees Bitcoin Reaching $150K by 2027
Despite the short-term pullback, Bernstein remains bullish on Bitcoin’s longer-term outlook.
The firm expects Bitcoin to reach approximately $150,000 by mid-2027 and potentially climb toward $300,000 during the next major cycle peak in 2029.
Bernstein believes rising government debt and borrowing costs could encourage policies that gradually weaken traditional currencies, potentially increasing demand for scarce assets such as Bitcoin.
Under its base-case scenario, the firm expects Bitcoin to trade around $125,000 by the end of 2026, before advancing toward $150,000 in 2027.
Altcoin Rally Also Loses Momentum
The broader cryptocurrency market also cooled following strong gains in recent sessions.
Ether slipped approximately 0.4% to $2,451, while XRP fell around 4.6% to $1.39.
Solana declined about 0.7%, while Cardano dropped roughly 3%.
BNB performed better than many major cryptocurrencies, gaining close to 1%.
Memecoins also weakened, with Dogecoin and the TRUMP token both posting declines.
Bitcoin Traders Focus on Inflation and Fed Policy
Bitcoin’s move back toward $78,000 highlights the market’s sensitivity to inflation expectations, interest rates and broader risk sentiment.
The cryptocurrency’s recent rebound remains intact compared with earlier lows, but persistent U.S. inflation could create additional volatility if investors begin pricing in a more restrictive Federal Reserve policy outlook.
Attention will now turn to upcoming economic reports, the September Fed meeting and broader market developments for clues on whether Bitcoin can regain momentum above the $80,000 level.
