According to a recent X post by seasoned crypto analyst Ali Martinez, a hotter than anticipated February Core Personal Consumption Expenditure (PCE) Price Index could derail Bitcoin’s (BTC) bullish trajectory. Persistent inflation may force the US Federal Reserve (Fed) to delay interest rate cuts, which may be bearish for risk-on assets.
February Core PCE Price Index Beats Projections
The US February Core PCE Price Index rose 0.4% on a month-over-month (MoM) basis, beating projections of 0.3%. Similarly, on a Year-over-Year (YoY) basis, the inflation measure surged 2.8%, eclipsing the 2.7% estimate.
For the uninitiated, the Fed relies on the PCE Price Index as a key inflation measure to assess price changes in consumer goods and services. Unlike the Consumer Price Index (CPI), the PCE accounts for any change in consumer behaviour patterns.
The PCE comprises two versions, Headline PCE and Core PCE. While the Headline PCE includes all goods and services – along with food and energy – Core PCE excludes food and energy to give the Fed a more stable measure of inflation trends.
A higher than expected Core PCE Price Index is bearish for risk-on assets – including cryptocurrencies – as it suggests that inflation may not have completely subsided yet. As a result, the central bank may delay interest rate cuts, which could cause further pullback in BTC and other digital assets.
Meanwhile, fellow crypto analyst Michael van de Poppe noted that although the trend still appears to be upwards for BTC, it is starting to appear shaky. The analyst added:
Drop sub $84K and I think we’ll see a test at $78-80K and perhaps lower before we’ll bounce back up.
Similarly, crypto analyst Rekt Capital noted that Bitcoin is once again testing its daily Relative Strength Index (RSI) downtrend. A failure to rebound from the trendline may lead to significant price decline for BTC, possibly pushing it down to the mid-$70,000 level.
Can Bitcoin Survive The Downtrend?
Following the February Core PCE Price Index data release, BTC is down 1.4% in the past 24 hours. That said, on-chain metrics and positive macroeconomic developments point toward a potential price recovery for the largest cryptocurrency by reported market cap.
For instance, the Bitcoin supply ratio on crypto exchanges recently fell to a fresh seven-year low, reinforcing the digital asset’s supply scarcity narrative which may lead to a rally. Data from Santiment suggests that the BTC supply ratio on exchanges has declined to 7.53%.
In addition, BTC selling pressure arising from whale wallets has finally come to a halt. At press time, BTC trades at $85,475, down 1.4% in the past 24 hours.
