Cryptocurrency Market Faces Decline Amid Surging Inflation Data
Date: March 28, 2025
By: FXStreet News Team
The cryptocurrency market has experienced a significant downturn today, with prominent digital assets like Bitcoin, Ethereum, and XRP showing sharp declines. This market correction comes on the heels of updated economic statistics that have raised concerns among investors.
Inflation Data Triggers Market Reaction
On Friday, Bitcoin (BTC) experienced a drop of approximately 4%, falling below the $84,000 mark. This decline was triggered by the announcement of the United States’ core Personal Consumption Expenditure (PCE) Price Index for February, which rose to 2.8%, exceeding analysts’ expectations of 2.7%. The PCE index is a key inflation gauge that is closely monitored by the Federal Reserve (Fed) as it indicates overarching economic trends.
The rise in core PCE inflation has evoked nervousness within financial markets, leading to broad sell-offs in both cryptocurrencies and stocks. In tandem with this inflation data, concerns over potential tariffs announced by former President Donald Trump have compounded market fears, contributing to a pervasive risk-off sentiment.
Marketwide Impact: Stocks and Altcoins Suffer Losses
The fallout from rising inflation expectations has not been limited to cryptocurrencies. Stocks have also taken a hit, with the S&P 500 index dropping nearly 2% and wiping out over $1 trillion from its market capitalization. The NASDAQ 100 mirrored this trend, experiencing similar declines.
As the cryptocurrency market reacted, altcoins such as Ethereum (ETH), XRP, Solana (SOL), and Dogecoin (DOGE) also witnessed substantial losses, erasing gains accrued earlier in the week. Data from Glassnode reveals that much of the selling pressure in the Bitcoin market originated from Short-Term Holders (STH) — investors who have held their Bitcoin for less than 155 days.
Long-Term Inflation Expectations Broaden Concerns
Inflation concerns have escalated, particularly with long-term inflation expectations now peaking at 4.1%, the highest level since 1993. Meanwhile, year-to-date inflation expectations surged from 2.6% to 5% amid ongoing discussions about international tariffs and trade dynamics, setting the stage for potential instability in the economic environment.
The Kobeissi Letter noted the trade deficit has widened significantly due to "tariff front-running," estimating a $300 billion gap over the past two months. Furthermore, consumer sentiment among investors has deteriorated, with expectations for higher stock prices plunging 9.3 points in March — the largest decrease since the onset of COVID-19 in March 2020. ## Sector-Specific Declines in Crypto
The declines in the cryptocurrency market have also impacted specific sectors within the space. The artificial intelligence segment has seen a notable downturn of over 7%, with leading AI tokens such as NEAR, Bittensor, and Render recording declines of 10.8%, 10%, and 8%, respectively. Other sectors like meme coins and real-world assets (RWA) have also not escaped the sell-off, recording losses of 8% and 5%, respectively.
Conclusion
Today’s downturn in the cryptocurrency market is a stark reflection of macroeconomic pressures fueled by rising inflation data and tariff implications. As investors navigate this turbulent climate, the correlation between cryptocurrency values and stock market performance continues to intensify, suggesting a broader economic trend that investors will need to monitor closely in the coming weeks.
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