BTC Faces Key Support Test as US PCE Data Exceeds Expectations
Bitcoin (BTC) experienced a sharp decline on March 28, falling by over 3% as fresh US inflation data came in higher than expected. The cryptocurrency briefly dropped below $84,500, marking its lowest level since March 23.
Inflation Data Sparks Market Volatility
The latest figures from the US Personal Consumption Expenditures (PCE) Index, a key inflation gauge for the Federal Reserve, showed inflation accelerating in February. While the month-on-month and year-on-year PCE figures aligned with market forecasts at 0.3% and 2.5%, respectively, core inflation readings came in 0.1% higher than anticipated.
The hotter-than-expected data fueled concerns about persistent inflationary pressures. Market analyst Kobeissi Letter noted that the rising inflation figures, coupled with previous revisions, could set the stage for “stagflation in 2025.”
With March inflation data yet to be released, analysts suggest that the ongoing trade war could further impact macroeconomic conditions.
Bitcoin’s Price Struggles Amid Inflationary Pressure
Ahead of the Wall Street open, Bitcoin attempted to stabilise at $85,500 but quickly reversed course, dropping below $84,500. Data from Cointelegraph Markets Pro and TradingView highlighted increased market turbulence following the inflation report.
Crypto traders were prepared for volatility, with Daan Crypto Trades noting that PCE data would likely lead to significant market fluctuations.
Despite Bitcoin holding above $80,000 for several weeks, market sentiment remains cautious. Crypto analyst Michaël van de Poppe warned that the uptrend appears to be weakening. He suggested that if Bitcoin falls below $84,000, a further decline towards the $78,000–$80,000 range—or even lower—could follow before any potential recovery.
Market Cooling as Bullish Sentiment Weakens
While Bitcoin’s short-term price movements hint at a possible squeeze, analysts argue that broader market conditions do not yet support a full-scale bull run.
Trader TheKingfisher described the current phase as a “typical market cooldown,” suggesting that Bitcoin may be undergoing a seasonal reset ahead of the familiar “sell in May and go away” market trend.
With volatility continuing to decline, Bitcoin’s next move will likely be dictated by macroeconomic trends, particularly upcoming inflation reports and Federal Reserve policy decisions.
For now, traders are closely watching the critical $84,000 support level, which could determine whether Bitcoin maintains its current range or faces a deeper correction.
