TL;DR
- The crypto market experienced a 4% drop due to inflation data in the U.S. exceeding expectations, which negatively impacted investor sentiment.
- The total market capitalization decreased to $2.73 trillion, while the Personal Consumption Expenditures (PCE) Index rose by 0.4% monthly and 2.8% annually.
- Despite the drop, some analysts maintain an optimistic outlook for Bitcoin, highlighting that the second quarter has historically been positive for the cryptocurrency.
The crypto market suffered a sharp drop due to inflation data higher than expected in the United States, which negatively impacted investor sentiment.
The total crypto market capitalization dropped by 4%, reaching $2.73 trillion on Friday, in response to the increase in price indices. In particular, the Personal Consumption Expenditures (PCE) data for February, which is used by the Federal Reserve as its main inflation indicator, exceeded expectations. The PCE rose by 0.4% month-over-month, compared to the 0.3% forecast, and reached a 2.8% annual increase, above the estimated 2.7%.
The Increase in Inflation Hits the Crypto Market
The rise in inflation levels triggered alarms about potential interest rate cuts by the Federal Reserve in its May meeting. Despite this scenario, some analysts believe that the impact of these data is not as negative as it might seem. Matt Mena, research strategist at 21Shares, stated that while the inflation data may not be favorable for risk assets, it cannot be considered entirely negative, as the crypto market continues to show resilience.
Bitcoin Falls and Drags Everyone Down
Regarding variations in the crypto market, Bitcoin (BTC) is trading at approximately $83,813, with a 3.68% decrease compared to the previous close. Ethereum (ETH) is priced around $1,872.41, reflecting a 6.78% drop. Binance Coin (BNB) is around $623.36, down 2.13% in the last 24 hours. XRP (XRP) is trading at approximately $2.18, showing a 7.23% decrease.
Cardano (ADA) is priced at $0.695, with a 5.40% drop in the last day. Dogecoin (DOGE) is close to $0.179, with a 6.10% decrease since its last close. Solana (SOL) is trading at around $129.66, with a 6.21% drop. Finally, Polkadot (DOT) is priced at $4.28, showing a 6.75% decrease.
Despite short-term volatility, analysts maintain an optimistic outlook for Bitcoin in the near future. Historically, the second quarter of the year has been a favorable period for the cryptocurrency, although trade tensions and concerns over inflation could affect market trends. However, experts suggest that regulatory clarity and institutional support for the crypto market could create favorable conditions for a rebound in the coming months
