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Federal Reserve's PCE Data Sparks Crypto Market Volatility

The Federal Reserve's core PCE index exceeded expectations in February, rising 0.4% month-over-month and 2.8% annually. This has significant implications for interest rates and crypto markets.
Published on 2025-03-28

Federal Reserve's PCE Data Exceeds Expectations

The Federal Reserve's core Personal Consumption Expenditures (PCE) price index, a key inflation indicator, rose 0.4% in February, surpassing the expected 0.3%. The 12-month inflation rate reached 2.8%, above the anticipated 2.7%. This data suggests that inflation is cooling slower than expected, potentially influencing the Fed's interest rate decisions.

Impact on Crypto Markets

The crypto market has reacted negatively to the higher-than-expected PCE data. Bitcoin (BTC) dropped 3.05% to $84,357, while Ethereum (ETH) fell 6.46% to $1,892. Other major cryptocurrencies like XRP, Solana (SOL), and Dogecoin (DOGE) also saw declines of approximately 7%. Chainlink (LINK) and Avalanche (AVAX) dropped around 9%, with Cardano (ADA) and Stellar (XLM) down over 5%.

Market Liquidations and Volatility

Over $423 million in crypto liquidations occurred in the last 24 hours, with $367 million of these being leveraged long positions. This volatility reflects traders adjusting their positions in response to the Fed's potential policy direction. The crypto market's downturn aligns with broader financial market concerns about prolonged high interest rates and reduced liquidity.

Broader Economic Implications

The Federal Reserve, after cutting rates by a full percentage point in 2024, has maintained a hold on further cuts this year due to economic uncertainty. The higher PCE data may lead to continued high interest rates, reducing risk appetite and impacting cryptocurrencies as investors move away from risk-on assets. This environment could continue to weigh on crypto prices in the near term.

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