Bitcoin falls below $70,000 after strong US inflation data

Thursday 19 - 16:50

By: Dakir Madiha

Bitcoin falls below $70,000 after strong US inflation data

Bitcoin dropped below the $70,000 mark on March 18 after stronger than expected US producer price data reinforced inflation concerns, just hours before the Federal Reserve held interest rates steady, extending a pattern of post-policy declines in crypto markets.

The cryptocurrency fell as much as 5.7 percent over 24 hours, briefly touching $69,917 after trading near $74,000 earlier in the day. The decline coincided with more than $558 million in liquidations across crypto futures markets, highlighting increased volatility following macroeconomic data releases.

US inflation data surprised to the upside. The Producer Price Index for final demand rose 0.7 percent month over month in February, more than double the 0.3 percent forecast and above January’s 0.5 percent increase. On an annual basis, headline PPI reached 3.4 percent, the highest level in a year, while core PPI, excluding food and energy, climbed to 3.9 percent.

The increase was broad-based. Goods prices rose 1.1 percent, the largest monthly gain since August 2023, driven by higher food and energy costs linked in part to rising oil prices amid Middle East tensions. Services prices also increased 0.5 percent, marking a third consecutive monthly rise.

The Federal Reserve maintained its benchmark rate between 3.50 percent and 3.75 percent, in line with expectations. Updated projections showed only one potential rate cut of 25 basis points this year, while inflation forecasts were revised higher to 2.7 percent. The decision initially lifted Bitcoin toward $72,000, but the rebound proved short-lived as selling pressure resumed.

Capital flows also shifted. Spot Bitcoin exchange-traded funds recorded net outflows of $129.6 million on March 18, ending a week-long streak of inflows. By the following morning, Bitcoin was trading near $69,836, reflecting continued market uncertainty.

Analysts remain divided on the outlook. Some noted that Bitcoin’s decline during the Federal Open Market Committee meeting was smaller than losses in gold and equities, suggesting relative resilience. Others pointed to a recurring pattern, with Bitcoin falling after most recent Fed meetings, indicating sensitivity to monetary policy signals.

Data also shows a surge in retail inflows to crypto exchanges, often interpreted as a sign of profit-taking or capitulation. With persistent inflation, delayed rate cuts, and geopolitical tensions affecting energy markets, the near-term trajectory for risk assets remains uncertain.