Bitcoin, Ethereum, XRP and other digital assets edge lower as investors seek clues on future interest-rate moves
Dubai: Cryptocurrency prices declined across the board on Wednesday as investors adopted a cautious stance ahead of the release of the United States’ core Personal Consumption Expenditures (PCE) price index, the Federal Reserve’s preferred measure of inflation.
The pullback affected most major digital assets, with Bitcoin falling 0.65% to US$78,387, while Ethereum slipped 0.11% to US$2,459.
Other cryptocurrencies also traded lower:
- Solana fell 1.1% to US$96.87
- XRP declined 4% to US$1.41
- Dogecoin dropped 2.04% to US$0.086
Markets are closely watching the upcoming release of the core PCE index for fresh signals on inflation trends and the future direction of US monetary policy.
The core PCE measure excludes volatile food and energy prices and is one of the key indicators used by the Federal Reserve when assessing inflation and making interest-rate decisions.
The weakness across cryptocurrency markets reflects investor caution as risk assets remain highly sensitive to expectations regarding US interest rates.
Typically, expectations of higher interest rates for a prolonged period increase the appeal of fixed-income investments while placing pressure on higher-risk assets, particularly cryptocurrencies.
Investors are also seeking clues on the timing of a potential US interest-rate cut.
More moderate inflation figures could strengthen expectations of monetary easing, potentially improving risk appetite and attracting fresh liquidity into digital asset markets.
Conversely, stronger-than-expected inflation data could reinforce concerns that the Federal Reserve may keep monetary policy tighter for longer, potentially weighing on demand for cryptocurrencies.
The current decline follows a strong rally in recent weeks driven by rising demand for Bitcoin and increased investor inflows into cryptocurrency-linked exchange-traded funds (ETFs).
Traders are now monitoring whether current price levels can hold, as cryptocurrency markets remain closely tied to developments in the US economy, Federal Reserve policy and broader global financial conditions.
Source: Emirates 24|7