Bitcoin Price Falls Back Toward Week's Low on Inflation Worry

The January PCE Price Index – the Fed's favored inflation indicator – unexpectedly rose to 5.4%.

AccessTimeIconFeb 24, 2023 at 2:40 p.m. UTC
Updated Feb 28, 2023 at 9:01 p.m. UTC

The odds of the U.S. Federal Reserve hiking its benchmark fed funds rate by 50 basis points in March are on the rise after the PCE Price Index showed the disinflation trend reversed in January.

The PCE Price Index for January rose 5.4% from a year ago, compared with a 5.3% increase in December. The January number was far stronger than economist forecasts of a 5.0% increase. The core rate, which excludes food and energy prices, rose 4.7% versus 4.6% in December and was higher than the estimated 4.3% growth.

On a monthly basis, the PCE Price Index gained 0.6% in January, up from 0.2% in December and against expectations for a 0.5% increase. The core rate also rose 0.6% in January, versus a 0.4% increase in December and forecasts for a 0.4% rise.

Risky assets fell following the report, with bitcoin (BTC) shedding about $200 to $23,730 and threatening to fall to $23,000, which would be its lowest level of this week. Nasdaq 100 futures were down 1.9%, and S&P 500 futures were lower by 1.4%.

In addition, crypto-related stocks are off sharply. Coinbase (COIN), MicroStrategy (MSTR) and Marathon Digital (MARA) are all lower by 5%-8%.

Though severely backward looking – this report is for January – the gauge of personal consumer expenditures remains the Fed's favored inflation indicator. Following the report, odds of a 50 basis point rate hike (as opposed to 25 basis points) at the Fed's next policy meeting in March are rising, with traders now nearly evenly split between the two choice, according to the CME's FedWatch tool. As recently as one month ago, there was roughly a 100% expectation of a 25 basis point move in March.

Though remaining elevated, inflation during late 2022 had been trending lower, with Fed Chairman Jerome Powell saying in January he was seeing signs of a disinflation trend. This report could call that into question.

"Inflation remains stubborn and sticky between 4%-5%," tweeted RSM Chief Economist Joe Brusuelas. "Service inflation continues to increase with goods disinflation cooling. [The] risk of a March 50 basis point hike [is] rising and we are clearing moving toward a 5.5% policy peak at a minimum."

(UPDATE Feb. 24, 2023 16:40 UTC) Adds information about crypto-related stocks.


Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.

CoinDesk - Unknown

Stephen Alpher is CoinDesk's co-regional news chief, Americas. He holds BTC above CoinDesk’s disclosure threshold of $1,000.

Learn more about Consensus 2024, CoinDesk’s longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to to register and buy your pass now.