Bitcoin dropped sharply on Friday, breaking below $84,000 as new inflation data signaled continued economic pressures, raising doubts about Federal Reserve rate cuts in the near term. The world’s largest cryptocurrency fell 3.9% to $83,866.6 by 10:05 ET (14:05 GMT), extending losses from earlier in the week.
The U.S. Commerce Department reported that core personal consumption expenditures (PCE) inflation rose 0.4% in February, the highest monthly gain since January 2024. On an annual basis, core PCE climbed 2.8%, exceeding the 2.7% estimate from economists surveyed by Dow Jones. This key measure, which excludes volatile food and energy prices, is the Federal Reserve’s preferred inflation gauge.
Consumer spending increased 0.4%, slightly below forecasts, while personal income surged 0.8%, doubling estimates. The data cast doubt on hopes for imminent Fed rate cuts, leading to a broader sell-off in financial markets, including Bitcoin.
Trump’s Auto Tariffs Stoke Global Trade War Fears
Adding to market volatility, President Donald Trump announced a 25% tariff on all foreign-made cars and auto parts, effective April 2. The move, aimed at addressing trade imbalances, drew immediate backlash from key U.S. trading partners.
- Canadian Prime Minister Mark Carney declared that the long-standing U.S.-Canada trade relationship is “over,” advocating for a full-scale renegotiation of agreements.
- Carney also warned of retaliatory tariffs if Trump proceeds with the auto tariff plan.
- Trump is separately preparing global reciprocal tariffs on countries with substantial trade imbalances, further escalating tensions.
The threat of a global trade war triggered a broad risk-off sentiment across financial markets. Major U.S. stock indexes tumbled on Thursday, and Asian markets opened lower on Friday, reflecting investor unease.
Historically, Bitcoin has been viewed as a hedge against economic instability, but in recent months, it has traded in line with high-growth assets, making it susceptible to macroeconomic headwinds. Investors pivoted to traditional safe havens like gold, which hit a new record high in Asian trading.
Grayscale Seeks SEC Approval for Spot Avalanche ETF
In the latest development in the crypto ETF space, Grayscale Investments filed with the SEC to launch a spot Avalanche (AVAX) exchange-traded fund (ETF) on the Nasdaq. If approved, the ETF would directly hold AVAX, offering investors regulated exposure to the Avalanche blockchain’s native token.
Currently, Grayscale operates an Avalanche Trust with a 2.5% management fee. The proposed ETF aims to provide a more cost-effective and liquid investment vehicle. However, the SEC has yet to approve any spot altcoin ETFs beyond Ethereum-based funds, leaving the timeline for potential approval uncertain.
As of Friday, AVAX traded at $20.16, down 8% in 24 hours, mirroring broader market weakness. The next SEC decision deadline could determine whether more altcoin ETFs gain traction in the U.S. market.
Market Outlook: Bitcoin Faces Key Support Levels
With inflation rising faster than expected and trade war concerns mounting, Bitcoin’s near-term outlook remains uncertain. Analysts are watching key support levels at $82,000 and $80,500 to gauge whether selling pressure will ease. If macroeconomic conditions continue to deteriorate, Bitcoin may struggle to regain momentum above $85,000 in the coming weeks.
Investors are now closely monitoring upcoming economic data and Federal Reserve statements for further clues on interest rate policy and broader market direction.