Inflation Data Reignites Rate Hike Expectations
July US PCE inflation data came in higher than anticipated, sending ripples across risk assets including crypto. Bitcoin dipped below $78,000 on the print, alongside concurrent weakness in gold and equities, signaling that market participants are repricing interest rate expectations upward. The data directly contradicts the narrative of a gradual Fed pivot toward easing, which had supported risk appetite in recent weeks.
Traders are now actively positioning for a potential Fed rate hike rather than cuts, as reflected in elevated odds across derivatives markets. This shift is particularly notable given that bitcoin had posted a 14% weekly gain prior to the inflation print, suggesting momentum may be fragile if the Fed's restrictive stance persists longer than expected. XRP and other alts have been hit harder, with XRP down 28% over a longer period, indicating that rate-sensitive tokens are most vulnerable to duration-driven selloffs.
