Bitcoin Retreats Below $78K as Stronger-Than-Expected US Inflation Data Spooks Markets

Inflation Surprise Triggers Market-Wide Selloff

Bitcoin dropped below the $78,000 level Wednesday following the release of July’s Personal Consumption Expenditures (PCE) inflation data, which exceeded forecaster expectations and reignited concerns about persistent price pressures. According to the Bureau of Economic Analysis, as reported by Cointelegraph, the July PCE index climbed to 3.7% on a year-over-year basis, surpassing the anticipated 3.6% reading. Month-on-month, the index increased 0.2%, while the core measure—excluding volatile food and energy components—also posted a 0.2% monthly gain.

The disappointing inflation print weighed across multiple asset classes. US equities opened sharply lower on the news, while spot gold prices broke below the $4,600 per ounce threshold. Bitcoin itself shed roughly 1% in the hours following the data release. The weakness came as a particular disappointment to markets that had grown optimistic after June’s PCE figures delivered an unexpected monthly decline, marking the first such retreat in half a year.

Technical Pressure Mounts as Bears Reassert Control

On-chain and technical analysts offered a more cautious reading of Bitcoin’s recent price action. Prominent market observer Rekt Capital flagged the persistent pattern of lower highs that has dominated BTC/USD price structure since October 2025, warning that sustained weakness below key resistance levels could lock in this bearish formation. The analyst specifically highlighted the 50-week exponential moving average (EMA) positioned near $77,251 as a critical support zone that Bitcoin has struggled to reclaim and hold since last October’s close.

Rather than signaling a genuine trend reversal, this week’s modest rebound may represent merely a tactical bounce within a broader downtrend, Rekt Capital suggested. Confirming a fresh monthly candle close below the resistance would not only cement another lower high on Bitcoin’s macro chart but would also reinforce an entrenched downtrend structure that has defined the market for the better part of a year.

Economic Calendar Looming Large

Investors are bracing for potential volatility ahead, with the Federal Reserve’s Jackson Hole economic conference scheduled for Friday and featuring a keynote address by Chair Kevin Warsh. The timing of today’s hotter-than-expected inflation reading—arriving just hours before major central bank communications—has heightened market jitters. Additionally, technology heavyweight Nvidia is reporting Q2 results today, a report that could introduce short-term swings in risk-asset sentiment given the stock’s central importance to market momentum.

With US inflation running at nearly double the Federal Reserve’s 2.0% target, the path forward for rate cuts and monetary policy remains uncertain, keeping crypto markets hostage to macroeconomic momentum rather than sector-specific tailwinds. The inability of Bitcoin to sustain upside momentum above $80,000 underscores how tightly correlated crypto assets remain to broader financial conditions.

Source: Bureau of Economic Analysis, via Cointelegraph. Not financial advice.