• Bitcoin reacted negatively after the Federal Reserve’s favorite inflation metric, the Personal Consumption Expenditure (PCE) price index, rose 0.6% in January.
• As a result, Bitcoin fell from $24,000 to as low as $23,000 in just 30 minutes. Ethereum (ETH), Cardano (ADA), and Polkadot (DOT) all experienced significant losses as well.
• The crypto market pullback has led to over $110 million in liquidations in the past 4 hours.
Bitcoin Falls After PCE Price Index Rises
The Personal Consumption Expenditure (PCE) price index registered a 5.4% annual increase and a 0.6% monthly increase in January 2021, causing Bitcoin to fall back to $23,000 on Friday shortly after the figure was released. Ethereum (ETH), Cardano (ADA), and Polkadot (DOT) also experienced significant losses following this news resulting in over $110 million of liquidations within the past four hours alone.
Federal Reserve’s War Against Inflation Continues
The higher-than-expected figure of the PCE indicates that the Federal Reserve’s war against rising inflation will continue for some time yet. This is because the PCE is considered by the central bank to be a more accurate predictor of where inflation may be heading than other metrics such as the Consumer Price Index (CPI).
Major Market Pullback
The major market pullback has caused Bitcoin to tumble from its starting point of roughly $24,000 down to its current value at writing time of $23,217. Similarly, Ethereum dropped by 3.3%, Cardano fell by 4.6%, and Polkadot declined by 7%. The NASDAQ and S&P500 have also slumped with decreases of 1.81% and 1.25%, respectively since Friday morning when news of this inflationary rise was first reported..
Largest Single Liquidation on BitMEX
Data from Coinglass reveals that over $44 million worth of BTC and $22 million worth of ETH were liquidated due to this latest market pullback with the largest single liquidation taking place on BitMEX on an XBTUSD trade for approximately $7.52 million USDT worth of BTC tokens sold off at once..
Ultimately this news from January has caused a significant ripple effect across both traditional fiat markets such as NASDAQ and S&P500 but also digital asset markets such as cryptocurrencies like Bitcoin leading them all down significantly for now until further news about inflationary measures is announced or acted upon by central banks around the world including but not limited to The Federal Reserve Bank