Bitcoin Faces Sudden Drop as Economic Concerns Rise

Bitcoin $84,293 price saw a sharp decline, dropping to the $86,000 level, with a sudden fall of $3,000. This drop was attributed to negative data released just minutes before, causing daily lows to plummet further. The question arises: what are the expectations for cryptocurrencies now?

Why Are Cryptocurrencies Falling?

Bitcoin price decreased to $86,565 after the consumer confidence index was reported at 98.3, against an expected 102.5. As negative trends in inflation intensify, concerns about the upcoming PCE data on February 28 are growing. The details from the consumer confidence report indicate a rise in inflation expectations.

“The 12-month average inflation expectations increased from 5.2% in February to 6%. This rise is likely a reflection of both persistent inflation and recent increases in prices for basic food items like eggs, as well as the anticipated effects of tariffs.”

Trump’s insistence on additional tariffs and the resurgence of producer inflation heighten fears that the Fed might implement rate hikes instead of cuts. Fluctuations in raw material prices are adversely affecting production data, while recession risks are on the rise. With both inflation and recession increasing, conditions for cryptocurrencies are becoming more challenging.