Bitcoin dropped below the $59,000 mark on Friday, reacting to the May Personal Consumption Expenditures (PCE) price index which came in at 4.1% year-over-year, according to the Bureau of Economic Analysis. The leading cryptocurrency by market cap saw its price slip to around $58,800 on major exchanges, a decline of roughly 2.5% in the 24 hours following the data release.
Market data pointed to a wave of long liquidations across crypto derivatives exchanges as the inflation figure exceeded some economists' expectations. Total crypto market capitalization contracted by approximately 3%, with Bitcoin's dominance hovering near 51% as altcoins faced steeper percentage losses. Spot Bitcoin ETF flows turned negative, with net outflows of $120 million recorded on Friday, according to preliminary data from fund issuers.
The inflation reading complicates the near-term outlook for Federal Reserve policy, as the 4.1% figure remains well above the central bank's 2% target. This reduces the probability of near-term rate cuts, a scenario that traditionally pressures risk assets like cryptocurrencies. The correlation between Bitcoin and the tech-heavy Nasdaq 100 has strengthened in recent months, making macro data releases a key driver of short-term price action.
With Bitcoin's market cap now around $1.16 trillion, the asset has erased roughly $80 billion in value since the May PCE release. Bitcoin's 30-day realized volatility has expanded to 65%, suggesting heightened uncertainty among traders. Compared to the broader crypto sector, Bitcoin has outperformed Ethereum and smaller-cap tokens over the past week, though all major coins faced selling pressure in this macro-driven sell-off.
Some analysts caution that the market's reaction may be overblown, noting that inflation data alone does not dictate immediate Fed action. Crypto traders are now eyeing the upcoming June jobs report and next month's FOMC meeting for further directional cues. The $57,500 level is viewed as key support, with on-chain data showing significant accumulation zones between $55,000 and $57,000.