The price of Bitcoin is falling after US inflation data: key support at $84,000 under pressure

The day of March 28 saw a clear retreat for the price of Bitcoin, which lost over 3% following the release of new data on the PCE (Personal Consumption Expenditures) Price Index in the United States (USA). 

The renewed fear of persistent inflation worries investors and puts an important technical threshold at risk: the support at 84,000 dollars.

At the center of attention is now the market’s ability to stay above this level. A breakdown could trigger further selling and a return to the lows of recent weeks.

Analysts warn: the scenario becomes complicated for the price of Bitcoin following the USA data 

At the opening of Wall Street, Bitcoin reached a local high of 85,500 dollars, before quickly reversing course and sliding down to 84,500 dollars on Bitstamp, the lowest level in almost a week.

The February PCE data, eagerly awaited by operators, were in line with expectations on a monthly basis (+0.3%) and annual basis (+2.5%). 

However, the core figure, which excludes the more volatile components such as food and energy, recorded a +0.3%, or one-tenth of a point above the consensus.

This detail, although subtle, has reinforced fears of a resurgence in core inflation, complicating the outlook for an easing of U.S. monetary policy.

According to the financial bulletin The Kobeissi Letter, the dynamics of the PCE “suggest a return towards a more aggressive inflationary trajectory.” 

The team notes that even the January data has been revised upwards, marking a scenario in which stagflation (a term indicating a phase with stagnant growth and high inflation) becomes a concrete possibility during 2025.

“The next data, related to March, will be particularly decisive, in a context made even more uncertain by the geopolitical tensions and the ongoing trade war,”

it reads in the comment published on X (ex-Twitter).

The drop in BTC prices occurred in a context of renewed volatility. The trader Daan Crypto Trades commented on X that the day was shaping up to be “highly unstable,” given the relevance of the upcoming macro data.

Among the more cautious experts, Michaël van de Poppe has warned of a possible technical deterioration. Although he maintains a moderately positive view, he highlights that the bull trend is becoming “visibly more fragile.” 

According to the expert, a decisive break below 84,000 dollars could pave the way for new tests towards the range between 78,000 and 80,000 dollars.

The cooling of the market could be physiological

A voice outside the chorus is that of the analyst TheKingfisher, who acknowledges the bear pressure but does not associate it with a structural reversal signal. 

According to his analysis, we are in the midst of a typical intermediate cooling, useful for rebalancing the market after the recent speculative runs.

“We are not yet in a confirmed bear phase. The picture is closer to a temporary stabilization, typical of spring markets,”

states.

The analyst indeed hypothesizes the return of the seasonal saying “sell in May and go away,” which suggests a possible pause in the bull pressures close to the summer months.

All eyes are now focused on the psychological and technical support of 84,000 dollars. Maintaining it represents an essential condition to contain the risk of a broader decline.

A potential breakdown could pave the way for a rapid test of the area between 78,000 and 80,000 dollars, levels that have not been explored for several weeks. On the contrary, a rebound beyond 85,000 dollars could help restore confidence in the short term.

Inflation, Fed, and Bitcoin: a delicate triangle

Persistent inflation and the cautious tone of the Federal Reserve remain the main exogenous factors influencing criptovalute.

An increase in the core component, like the one seen in this latest report, strengthens the scenario of a possible postponement of the interest rate cuts expected for the second half of the year.

This, in turn, supports the dollar and acts as a brake on riskier assets, including Bitcoin, which have benefited from low rates and abundant liquidity in recent years.

The behavior of BTC will therefore continue to be driven by the dualism between macro narrative and technical dynamics. In this fragile balance, the breaking (or maintaining) of key thresholds could outline the market mood for the weeks to come.